Contributions
$0
Returns
$0
Fees
$0
Total
$0
What's it Worth?
Inflation reduces the future value of money. These figures show how much would buy in today’s dollars after years of inflation at each average annual rate:
$0
$0
$0
For context, inflation averaged about 2.7% annually over the 30 years before the COVID-19 pandemic. In more recent years, it has averaged closer to 4%. Future rates may be higher or lower.
Understanding Investment Fees
Investment fees can quietly erode your long-term gains.
Using the current calculator values, the total balance without fees would have been $0, meaning fees reduced overall earnings by .
Annual fees typically encountered by investors include:
- Expense Ratio - Management fees charged by mutual funds and similar investments.
- Assets Under Management (AUM) - Fees on total assets managed charged by some financial advisors.
Some investors may even pay both: a mutual fund expense ratio and an advisor’s AUM fee. For example, if a fund charges 0.75% and the advisor charges 1%, the total annual fee would be 1.75%.
Fees for passive mutual funds generally range from 0.02% to 0.2%. Fees for actively managed funds range from 0.5% to 1.5%. Fees charged by investment advisors using the AUM model average around 1%.
While some fees may be unavoidable, minimizing fees can have a big impact. For example, you could choose to invest in low-fee funds that track a stock index like the S&P 500 and, if you hire a financial advisor, consider one who charges on an hourly versus AUM basis.
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