Translate percentage fees into net return
A simplified model subtracts a 0.75% annual fee from a 7% gross return to model 6.25% before other costs and taxes. Real products may assess fees on different schedules or balances.
Measure the opportunity cost
The gap between a no-fee projection and a fee-adjusted projection includes fees and the growth those fees could have earned. That gap usually widens with time.
Compare the same service and risk
A lower fee is not the only fact that matters. Compare investment objective, risk, holdings, service, trading costs, taxes, and account features as well as headline expense ratios.
Example: a one-point return gap
$50,000 growing for 25 years at 7% becomes about $271,000 with no new contributions; at 6% it becomes about $215,000. The roughly $56,000 gap illustrates compounding, not a guaranteed outcome.
What to check before you decide
- Projected returns are assumptions, not forecasts.
- Read the prospectus and account disclosures for actual fee timing and scope.
Sources behind this guide
These official and primary sources let you verify rules, definitions, and terms that may change.
Investor.gov — How fees affect a portfolio↗