Investment Fee Drag Calculator

The projection steps one month at a time. In each month the balance grows at the monthly equivalent of the assumed gross annual return, the percentage fee is taken from the grown balance, any scheduled fixed fee is taken after that, and a contribution is added at whichever end of the period you selected.

Converting annual rates to monthly ones

A rate quoted for a year is converted by the twelfth root, so twelve monthly steps reproduce the annual figure exactly:

monthly growth factor    = (1 + g) ^ (1/12)
monthly retention factor = (1 - F) ^ (1/12)

g is the assumed effective annual gross return and F is the combined effective annual percentage fee. Dividing an annual rate by twelve would describe a different quantity, a nominal rate compounded monthly, and at 7% it overstates the year by roughly 0.23 percentage points. This model does not use that form anywhere.

Order of events in each month

[contribution, if you chose beginning of period]
gross growth
percentage fee
fixed fee, if one is scheduled this month
[contribution, if you chose end of period]

A fixed fee is floored at the balance available when it falls due. The balance never goes negative, no unpaid remainder is carried forward, and later contributions continue to arrive on schedule. Debt, account closure and provider-specific treatment are not modelled.

The fee-free reference

The comparison path uses the same starting amount, the same contribution events, the same timing, the same monthly growth and the same horizon, with no percentage fee and no fixed fee. Giving it a different contribution schedule would make it a different scenario rather than a reference, and the difference between the two would then quietly include a timing effect this page attributes entirely to fees.

The fee-free path is a mathematical reference used to isolate the modelled cost. It is not presented as an available product.

How the difference divides

total projected fee drag = fee-free ending value - after-fee ending value
estimated fees deducted  = sum of every percentage and fixed deduction
fee compounding effect   = total projected fee drag - estimated fees deducted

The first line is what the projection actually removed, summed at the dates it was removed. It is not compounded forward to the end date. The second line is the residual left over once those deductions are subtracted from the terminal difference. It is an output of this model, not a charge any provider made.

That residual is signed, and it is not always positive. On a rising path, money removed early stops compounding, so the terminal difference exceeds the deductions and the residual is positive. On a falling path the same mechanism runs the other way: money removed early is also no longer exposed to the later decline, so the terminal difference can be smaller than the deductions and the residual is negative. A negative residual does not reverse the fees deducted and does not make the fee beneficial. The money was still taken in full. The companion explainer works through why.

Assumptions

• The gross return is the figure you entered, constant across the whole horizon.
• Every percentage cost behaves as one effective annual charge on the invested balance. Real providers may calculate components on different balances, accrue daily, deduct at different times, or use tiers and minimums.
• Contributions arrive exactly on schedule and are never missed.
• Values are not rounded during the calculation; rounding happens only for display.

What this calculation cannot tell you

• Whether a fee is worth paying. This model prices the fee and nothing the fee buys: advice, tax handling, risk control, access, service or behavioural support.
• Whether the return you assumed is realistic. It is your assumption, not a UBWHY forecast.
• Whether two real products carry equal risk or equal gross performance.
• Anything about tax, performance fees, high-water marks, transaction costs, spreads, entry or exit loads, tiered schedules, portfolio-size discounts, fees that vary by year, currency conversion, variable return paths, volatility or withdrawals. None of these is modelled.
• Whether an investment is suitable for you. This is not financial, legal or tax advice.