The math, fee by fee
Assume a $25,000 start, $500 added each month, 30 years, and a 7% yearly return before fees. The fee comes out of the balance every month, as it does in a real fund. This is the same model as the Expense Ratio Calculator.
| Yearly fee | After 30 years | Cost vs no fee |
|---|---|---|
| 0.00% | $775,033 | - |
| 0.10% | $758,010 | $17,022 |
| 0.14% (average index equity ETF) | $751,320 | $23,713 |
| 0.40% (average equity mutual fund) | $709,431 | $65,602 |
| 1.00% | $622,536 | $152,497 |
The averages are 2025 asset-weighted figures from the Investment Company Institute. The spread between 1.00% and 0.10% is about $135,474, roughly two-thirds of the $205,000 paid in over the 30 years.
A $10,000 lump sum, same story
No monthly additions this time: $10,000 invested once, 30 years, 7% before fees.
| Yearly fee | After 30 years | Share of the no-fee balance lost |
|---|---|---|
| 0.00% | $76,123 | - |
| 0.14% | $72,991 | 4% |
| 0.40% | $67,513 | 11% |
| 1.00% | $56,386 | 26% |
The fee does not look large in any single year. It is charged on the whole balance every year, so the lost dollars compound too.
What the average fund charges
The Investment Company Institute's 2025 fee study, published March 2026 (asset-weighted averages):
- Equity mutual funds: 0.40%, unchanged from 2024, down 62% since 1996.
- Index equity ETFs: 0.14%, unchanged from 2024.
- Bond mutual funds: 0.36%, down 2 basis points from 2024.
- Index bond ETFs: 0.09%.
Asset-weighted means large funds count more than small ones, so these averages track what the typical invested dollar actually pays.
What this shows, and what it does not
It shows the cost of a fee in dollars on one fixed path: 7% every year before fees, no taxes, no withdrawals. Real returns vary year to year, so real results will differ from the tables.
It does not say every fee is wasted. A fund or an advisor can be worth paying for. The test is whether what you get back beats the fee after costs, and the first step in that test is knowing the fee in dollars.
Common questions
Is 0.40% a good expense ratio? It is the 2025 average for equity mutual funds, so it is typical rather than unusual. Index equity ETFs average 0.14%. Whether either is good for you depends on the dollar cost over your own time frame, which the calculator shows.
Does a higher fee buy higher returns? The fee is certain: it is charged every year, in up markets and down. Any extra return is not certain. Compare what you pay with what you actually use or receive.
Where do I find my fund's expense ratio? On the fund's page or fact sheet and in its prospectus. For a 401(k), look at the plan's fee disclosure, and remember the plan itself can add an administration fee on top. The SEC and Department of Labor links below explain both.
Is the fee taken only from gains? No. It comes out of the whole balance every year, including years when the fund loses money.
Is this financial advice? No. It explains a calculation.
Related tool
Expense Ratio Calculator turns your own fee into dollars: your balance, your monthly addition, your years. It also covers 401(k) plan fees and advisor fees.
Sources
Investment Company Institute: Mutual Fund and ETF Fees Remained Near Historic Lows in 2025 (2025 averages, asset-weighted; retrieved October 11, 2026).
SEC Investor.gov: Expense Ratio (glossary) and Mutual Fund and ETF Fees and Expenses.
U.S. Department of Labor, EBSA: A Look at 401(k) Plan Fees.
Dollar figures come from the same monthly model as the calculator: monthly growth of (1+7%)^(1/12)-1 with the fee divided by 12 taken from the balance each month, contributions added after. Figures are rounded to the nearest dollar.
Limits
Educational explanation, not tax, legal or investment advice. Examples are labelled. Nothing here promises a result.