ETF Fee Calculator: See How Much You Could Save on Fund Costs

Trying to decide between ETFs? Fund fees might seem small, but they can take a significant bite out of your returns over time. Our ETF fee calculator shows you exactly how much those seemingly tiny percentage differences could cost you over the years. Simply enter your investment details and watch your potential savings.

What is an ETF Expense Ratio?

An ETF expense ratio is the annual fee charged by a fund to cover its operating costs, including management, administration, and marketing. This fee is expressed as a percentage of your total investment and is deducted automatically from the fund's returns. For example, if you invest in an ETF with a 0.50% expense ratio and the fund returns 8% before fees, your actual return would be 7.50%.

While a 0.50% fee might seem negligible, the impact compounds dramatically over time. A difference of just 0.20% between two ETFs can result in tens of thousands of pounds in lost returns over a 30-year investment horizon. This is why cost-conscious investors often prioritise low-cost index funds from providers like Vanguard, iShares, or SPDR.

How to Use This Calculator

Our ETF fee calculator helps you visualise the long-term impact of fund costs on your investment returns. Simply enter your investment details and compare two ETFs with different expense ratios:

• Initial Investment: The amount you are starting with today
• Annual Investment: How much you plan to add to your investments each year
• Annual Investment Increase: Optional percentage increase in your annual contributions (to account for salary growth)
• Expected Return: Your anticipated annual return before fees (historically 7-10% for global stock markets)
• Time Period: How long you plan to stay invested
• Low-Fee ETF: The expense ratio of a low-cost fund (e.g., 0.03% for Vanguard S&P 500)
• High-Fee ETF: The expense ratio of a higher-cost alternative (e.g., 0.50% or more)

The calculator will show you the final portfolio value for each scenario and your total savings from choosing the lower-cost option. Hover over the chart to see the exact values and fee savings for any year.

Typical ETF Expense Ratios

ETF fees vary widely depending on the fund type, investment strategy, and provider. Here are some benchmarks to help you evaluate whether an ETF offers good value:

• Ultra-low cost (0.03-0.10%): Broad market index funds from major providers like Vanguard, iShares, and SPDR. Examples include the Vanguard S&P 500 ETF (VOO) at 0.03% and iShares Core MSCI World (IWDA) at 0.20%.
• Low cost (0.10-0.30%): Diversified international funds, sector ETFs, and some factor-based strategies.
• Moderate cost (0.30-0.60%): Actively managed ETFs, thematic funds, and some emerging market funds.
• High cost (0.60%+): Specialised strategies, leveraged products, and some actively managed funds. These require careful consideration of whether the higher fee is justified by potential outperformance.

As a general rule, passively managed index funds tracking broad markets should cost well under 0.20%. Any fund charging significantly more needs to demonstrate clear value to justify the higher expense.

Why Fees Matter More Than You Think

The power of compound growth works against you when it comes to fees. Each year, the fee is applied to your entire portfolio, including previous years' gains. This creates a compounding drag on your returns that grows larger over time.

Consider this example: if you invest $10,000 initially and add $6,000 annually with an 8% expected return over 30 years:

• At 0.03% expense ratio: Your portfolio grows to approximately $907,000
• At 0.50% expense ratio: Your portfolio reaches approximately $815,000
• The difference: Over $92,000 in lost wealth from a fee difference of just 0.47%

This demonstrates why minimising investment costs is one of the few factors you can control that has a guaranteed positive impact on your long-term returns. To understand more about how compounding works, try our compound growth calculator.

Tips for Minimising ETF Costs

• Choose broad index funds: Funds tracking major indices like the S&P 500 or MSCI World typically have the lowest fees.
• Compare similar funds: Different providers often offer nearly identical products at different price points. A few minutes of research can save you thousands over time.
• Watch for hidden costs: Consider trading spreads, currency conversion fees, and platform charges in addition to the expense ratio.
• Avoid unnecessary complexity: Thematic and factor-based ETFs often charge higher fees. Unless you have a specific reason to use them, simple broad-market funds are usually more cost-effective.
• Use a low-cost broker: Platform fees can add to your total cost of investing. Check our broker reviews to find cost-effective options.

Related Financial Calculators

Understanding ETF fees is just one part of building a successful investment strategy. Explore our other free calculators to plan your financial future:

• Compound Growth Calculator - See how your investments can grow over time with the power of compounding
• FIRE Calculator - Calculate how much you need to retire early and achieve financial independence
• Dividend Investing Calculator - Project your passive income from dividend-paying investments

Ready to Start Investing in Low-Cost ETFs?

Now that you understand the impact of ETF fees on your long-term wealth, the next step is choosing the right platform to buy them. Different brokers offer varying commission structures, fund selections, and additional features that can affect your overall costs.

Browse our broker reviews to find the best fit for your needs, or check out our detailed reviews of popular platforms:

• Trading 212 - Commission-free investing with fractional shares
• Interactive Brokers - Professional-grade platform with competitive fees
• Lightyear - Low-cost European broker for ETF investors
• XTB - Zero-commission stock and ETF trading

Not sure which broker is right for you? Use our free broker matching tool to get personalised recommendations based on your investment goals and location.