Forbes Fund Expense Calculator

★ wanayoo — archive 1999 http://www.forbes.com/tool/toolbox/calc/fundcalc.asp

Beginning 401(k) balance :	$
Gross return on portfolio :	%
Annual contribution :	$
Inflation rate :	%
Expense ratio on expensive fund :	%
Expense ratio on low-cost index fund :	0.2 %
Number of years :

Results
in current Dollars
Ending balance low-cost index fund	0
Ending balance expensive fund	0
Effective cost of expensive fund	0
in 1997 Dollars
Ending balance low-cost index fund	0
Ending balance expensive fund	0
Effective cost of expensive fund	0
In our example (as stated in "Watch that Overhead"), we started with Dick and Jane both beginning with $100,000 and annual contributions of $14,500. In addition we assumed a 9% gross return on the portfolio and an annual inflation rate of 3%. Our low-cost index fund only has an expense ratio of 0.2%. That is as low cost as you can get. For the more expensive fund, we assumed an expense ratio of 1.2%. But don't take our word for it. Plug in your own numbers and see how your fund's expenses affect your investments. Brain Teaser Answer: Why a 1% a year compounded for 15 years totals only 14%. When you debit a portfolio by 1% for overhead expenses, you effectively multiply the balance by 0.99. Do that 15 times, and you multiply the balance by 0.99^15, which equals 0.86, more or less. That's the same as debiting it once by 14%.
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