When to use this calculator
Compare compounded balances with and without an assumed ongoing return reduction. Models fees as a fixed annual percentage-point reduction in return, not an actual fund charging method.
Explore the investment return calculators for other questions in this topic. For a related calculation, use the Investment Return Calculator: Calculate a simple return relative to the amount originally invested.
PUTTING IT INTO PRACTICE
Investment Fee Drag: a worked example
The values below are an illustrative example, not a recommendation. Replace them with measurements or assumptions that match your question.
| Input | Example value |
|---|---|
| Initial investment | 10,000 |
| Gross annual return (%) | 5 |
| Annual return reduction in percentage points | 1 |
| Years | 10 |
| Result | 1,486.503419 currency units |
- Check the input labels and enter the example values above.
- Apply the relationship: Fee drag = gross future value − future value at return minus fee.
- The result is 1,486.503419 currency units, rounded for display.
How to interpret your result
Models fees as a fixed annual percentage-point reduction in return, not an actual fund charging method.
Return measures must cover the same time period before comparison. CAGR annualises two endpoint values but does not model interim cash flows. Current income yield differs from total return or yield to maturity.
Frequently asked questions
Can CAGR handle money added during the period?
The simple endpoint CAGR model does not account for intermediate deposits and withdrawals. Those require cash-flow-aware methods.
When is the investment fee drag calculator useful?
Compare compounded balances with and without an assumed ongoing return reduction. Models fees as a fixed annual percentage-point reduction in return, not an actual fund charging method.
How do I use the investment fee drag calculator?
Enter initial investment, gross annual return (%), annual return reduction in percentage points, years. The result updates automatically. Use the units shown beside each input; the example values illustrate the method.
Which formula does this calculator use?
Fee drag = gross future value − future value at return minus fee.
What should I check before using the result?
Models fees as a fixed annual percentage-point reduction in return, not an actual fund charging method.
How are results rounded?
Scalar numbers display up to six decimal places, with scientific notation for very large or small values. Text, fraction, date and schedule outputs use the format described on the tool. Intermediate calculations use JavaScript floating-point arithmetic. Keep sensible precision for your measurements.
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