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Investment Expense Ratio & Ending Balance Impact

Compare a portfolio with and without a constant annual expense ratio, including an initial deposit and equal year-end contributions.

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Calculator inputs

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How to use this calculator

  1. Enter the known values in the units shown. Results update as you type.
  2. Where results are editable, change one to solve backwards. Lock a value to hold it fixed.
  3. Use the worked example to check the method. Reset restores the starting fields.

Use the result with context

Results are estimates for planning and education. Confirm rates, taxes, fees, and legal requirements with the relevant institution or a qualified professional before making a financial decision.

Formula and method

Starting with 1,000 and adding 100 at each year end for two years, a 5 percent gross return minus a 5 percent expense ratio leaves 1,200. The no-fee comparison is 1,307.50, a difference of 107.50.

Net return = gross return − expense ratio; ending balance = initial deposit × (1 + net return)^n + annual deposit × annuity factor

Worked example

Enter these known values and leave the other values blank.

Initial invested amount
1000 USD
Contribution at each year end
100 USD
Investment horizon
2 yrs
Assumed annual gross return
5 %
Annual expense ratio
5 %
Ending balance after modeled expenses
1200 USD
Ending balance lost relative to no fees
107.5 USD
Modeled annual net return
0 %
Ending value of the initial amount
1000 USD
Ending value of annual contributions
200 USD

Assumptions and limitations

  • The model subtracts the expense ratio from gross return once per year. Actual fund fee accrual, investment returns and cash-flow timing can differ.
  • Contributions occur at each year end. Use a positive whole number of years so the annual deposit count is exact; this model does not interpolate partial-year deposits.
  • The balance difference includes both modeled expenses and foregone growth. It is not the sum of fees actually charged. Gross return and expenses are nonnegative; net return may be negative but must exceed minus 100 percent.
  • Zero net return makes the contribution factor equal to the number of years. Zero initial and annual contributions produce zero balances; zero balances alone do not identify a duration.
  • The contribution future value is an accumulated currency amount. Bookify removes the captured per-year suffix from that result.

Common questions

Can expenses exceed the assumed return?

Yes. The modeled net return becomes negative, so existing holdings lose value even though later contributions may raise the final balance.

Is the balance gap the fund’s fee bill?

No. It also includes the growth those deducted expenses could have earned in the no-fee scenario.

References

Bookify handles zero net and gross returns explicitly in the contribution and expense-impact formulas and their inverses. Bookify permits zero or negative net returns above minus 100 percent, while requiring whole annual deposit counts and nonnegative contributions, gross returns and expense ratios.

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