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A very elementary way of projecting the impact of investment fund fees
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| def calc(principal, fee_pct, avg_growth_pct, annual_contrib, years): | |
| """ | |
| >>> calc(10000, 1.5, 7, 5500, 35) | |
| (154256.73, 48243.27) | |
| >>> calc(10000, 1.0, 7, 5500, 35) | |
| (168507.21, 33992.79) | |
| >>> calc(10000, 0.5, 7, 5500, 35) | |
| (184508.4, 17991.6) | |
| """ | |
| fee = fee_pct / 100 | |
| avg_growth = avg_growth_pct / 100 + 1 | |
| total_fees_paid = 0 | |
| for x in range(years): | |
| principal *= avg_growth | |
| principal += annual_contrib | |
| cost = principal * fee | |
| principal -= cost | |
| total_fees_paid += cost | |
| return round(principal, 2), round(total_fees_paid, 2) |
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I was comparing Fidelity and Vanguard index funds, and discovered what an impact a small difference in fees can make. In this (rudimentary) example above, the difference of just 1% in annual fees over 35 years can make a $30,000 difference in your portfolio!