Investment fee calculator

How to use the calculator

1. Choose a currency. It changes the symbol only.
2. Under Your investing, enter the Starting amount, the amount Added each month, the number of Years and the Return before fees.
3. Under Your fees (A), enter the Fund charge (OCF / expense ratio), the Platform or account fee, any Yearly cap on the platform fee (0 = none), an Adviser fee and any Flat fee per year.
4. To compare two sets of charges, leave Compare with a second set of fees switched on and fill in the boxes under Compare with B.

The defaults for A (a 0.20% fund charge and a 0.25% platform fee) add up to 0.45% a year, and those for B (0.75% fund, 0.35% platform and 1% adviser) add up to 2.1%. Neither set describes a particular provider. The results start with what the fees cost over the whole period, then split that into the fees you pay and the growth those fees would have earned.

How the numbers are worked out

The calculator works month by month. Each payment goes in at the start of the month, the balance grows at the monthly equivalent of the return, g = (1 + return)^1/12 − 1, and then the month’s fees come off:

fees for the month = balance × (fund charge + platform fee + adviser fee) ÷ 12 + flat fee ÷ 12

A platform cap stops the platform part once that year’s platform fees reach it. The cost of the fees is the pot with no fees minus the pot with fees; take away the fees you paid and what’s left is the growth they would have earned.

With the defaults, g is 0.4868% a month. In month 1, (10,000 + 200) × 1.004868 = $10,249.65, and the fee is 10,249.65 × 0.45% ÷ 12 = $3.84, which leaves $10,245.81. After 360 months the pot with no fees is $253,286 and the pot with 0.45% a year of fees is $229,933. The fees cost $23,353, which is $12,413 paid in fees plus $10,940 of growth those fees would have earned.

Types of fee

An investment can carry several layers of charges, and the calculator adds the percentage ones together.

• The fund charge is the yearly cost of running a fund. It comes out of the fund’s value, so it shows up as a lower return instead of a bill. The UK calls it the ongoing charges figure (OCF), the US the expense ratio and Canada the management expense ratio (MER).
• A platform or account fee is what the service holding your investments charges. It can be a percentage of your balance, a percentage with a yearly cap, or a flat amount.
• An adviser fee pays for ongoing advice, as a percentage of what you hold, a flat amount or both.
• A flat fee is a fixed sum each year, whatever the size of the pot.

The calculator leaves out dealing charges on each trade, currency conversion fees, entry or exit charges, performance fees and the transaction costs a fund pays when it buys and sells holdings. If you know any of these as a yearly percentage, add it to the fund charge.

Why percentage fees compound

A percentage fee grows with your pot. On the defaults, 0.45% a year takes about $52 in the first year and about $1,005 in the thirtieth. Each fee also takes the growth it would have earned, which is why the total cost ($23,353) is nearly twice the fees paid ($12,413).

At 2.1% a year, the B defaults, you’d pay $45,998 in fees and lose $43,964 of growth. That’s $89,962 in all: 35.5% of the pot you’d have with no fees, and more than the $82,000 paid in over 30 years.

Say Mei, in Canada, has C$25,000 invested and adds C$500 a month for 25 years, assuming 6% a year before fees. In a fund charging 1.80% a year she’d end with about C$327,500, after C$68,420 of fees and C$51,139 of growth lost on them.

That’s a total cost of C$119,558, or 26.7% of the pot she’d have with no fees. At 0.25% a year she’d end with about C$427,700 and the fees would cost C$19,349 (4.3%), so the two pots end about C$100,200 apart.

A late start takes away compounding in the same way, and the cost of waiting to invest calculator puts a number on that.

Percentage or flat-fee platform

A flat fee costs the same at any pot size, and a percentage fee grows with the pot, so which costs less depends on how much you hold. The break-even pot is the flat fee divided by the percentage: £120 a year against 0.25% breaks even at £48,000. The calculator shows it under the chart when you enter both.

A growing pot can cross that line. Take £20,000 plus £250 a month for 20 years at 6% before fees, with a 0.20% fund charge: with the 0.25% platform fee the pot ends at £166,606, and with the £120 flat fee at £168,429. The flat fee costs more for the first six years (total fees of £164 against £100 in year 1) and less from year 7 (£446 against £726 in year 20).

On a smaller pot, £2,000 plus £100 a month for 10 years, the flat fee leaves you about £1,300 worse off. If your platform caps its percentage fee, put the cap in Yearly cap on the platform fee (0 = none).

Scroll is education, not advice. Our lessons and calculators explain how money works in general. They don’t know your circumstances, so they can’t tell you what to do with yours. For that, speak to a qualified, regulated adviser in your country.

Where to find your fees

A UK or EU fund’s charge is on its factsheet and in its KID or KIID, the short documents that set out a fund’s costs and risks. US funds show it in the fee table near the front of the prospectus, as total annual fund operating expenses. Platforms list their fees and caps on a charges page. An adviser’s fee is in the agreement you sign.

What the calculator assumes

Every set of fees gets the same return before fees. In real life a cheaper fund may track a different index or follow a different strategy, so its return before fees can differ too. The calculator also leaves out tax, inflation and the cost of switching, such as exit charges, dealing costs or tax on gains if you sell outside a tax-free account. Fees come off monthly as a twelfth of the yearly rate; a provider that charges quarterly or daily gives a slightly different answer.

For the same growth with no fees taken and a today’s-money view, the compound interest calculator runs the numbers.