Index Fund Cost Comparison Calculator

Compare expense ratios between two index funds to see which one saves you more money over time. Even small differences in fees can have a massive impact on your wealth.

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Comparison Results

Calculated
Fund 1 Final Value
$0
0.00% expense ratio
Fund 2 Final Value
$0
0.00% expense ratio
Difference
$0
in savings

Choose Fund 1

Fund 1 saves you more money over the investment period.

Key Takeaways

  • Expense ratios directly reduce your investment returns every year
  • A 0.17% difference in expense ratio can cost you tens of thousands over 30 years
  • Lower-cost index funds typically outperform higher-cost actively managed funds
  • Always compare expense ratios when choosing between similar index funds
  • The impact of fees compounds over time, making early attention to costs crucial

Understanding Index Fund Expense Ratios

An expense ratio is the annual fee that index funds and ETFs charge investors, expressed as a percentage of your investment. This fee covers the fund's operating costs, including management, administration, and other expenses.

While expense ratios may seem small (often less than 1%), their impact compounds dramatically over time. A fund with a 0.03% expense ratio vs. one with 0.50% can result in a difference of over $100,000 on a $100,000 investment over 30 years.

How Expense Ratios Work

Expense ratios are deducted from your returns automatically. If your fund earns 10% and has a 0.20% expense ratio, your net return is 9.80%. This calculator assumes a 10% average annual return before expenses to show you the real-world impact.

Final Value = Investment x (1 + Return - Expense Ratio)Years
Investment = Initial amount
Return = Expected annual return (10%)
Expense Ratio = Annual fund fee
Years = Investment period

Why Low-Cost Index Funds Win

Research consistently shows that low-cost index funds outperform most actively managed funds over the long term. Here's why:

  • Lower fees mean more of your money stays invested and compounds
  • Passive management eliminates costly trading and research expenses
  • Market returns are hard to beat consistently, making fees the key differentiator
  • Tax efficiency often accompanies lower turnover in index funds

Popular Low-Cost Index Funds

When comparing index funds, consider these popular low-cost options:

  • Vanguard S&P 500 ETF (VOO) - 0.03% expense ratio
  • Fidelity ZERO Total Market Index - 0.00% expense ratio
  • Schwab S&P 500 Index Fund - 0.02% expense ratio
  • iShares Core S&P 500 ETF (IVV) - 0.03% expense ratio

Frequently Asked Questions

How accurate are the results?
The Index Fund Cost Comparison applies a standard formula to your inputs — accuracy depends on how precisely you measure those inputs. For planning and estimation, results are reliable. For high-stakes or professional decisions, cross-check the output with a domain expert or primary source.
What inputs have the biggest effect on the result?
In most financial calculations, the variables with the highest sensitivity are the rate (interest, return, or tax) and time. Try adjusting each by 10-20% to see which one moves the output most — that's where your energy in improving the input estimate is best spent.
How should I interpret the Index Fund Cost Comparison output?
The result is a calculated estimate based on the formula and your inputs. Compare it against the reference values or benchmarks shown on this page to understand whether your result is high, low, or typical. For decisions with real consequences, use the output as one data point alongside direct measurement and professional advice.
When should I use a different approach?
Use this calculator for quick, formula-based estimates. If your situation involves multiple interacting variables, time-varying inputs, or safety-critical decisions, consider a dedicated software tool, professional consultation, or direct measurement. Calculators are most reliable within their stated assumptions — check that your scenario matches those assumptions before relying on the output.