How this calculator works
- Step 1Start with one return12%Both funds earn the same yearly return before costs.
- Step 2Subtract each fee1.5% vs 0.5%The net return is the return minus the expense ratio.
- Step 3Compare the end values₹11.23 lakhThe gap after 20 years on the same money.
An expense ratio, or TER, is the yearly fee a mutual fund takes for running the scheme. It comes out of the fund’s value, so you never see a separate bill.
Worked example
A 1-point difference in yearly fees costs the default plan ₹11.23 lakh over 20 years.
- Net return
n = return before costs − expense ratio- Final value
L × (1 + n)^Y + P × FVdue(j, 12Y)
- Llump sum invested today ₹1,00,000.00
- Pmonthly SIP, at the start of each month ₹10,000.00
- Yyears invested 20
- jmonthly rate equal to the net yearly return from n
- You invest₹25,00,000.00
- Fund A, net 10.5%₹84,19,814.52
- Fund B, net 11.5%₹95,42,553.68
- Difference₹11,22,739.16
Reading the result
The gap grows faster than the years, because the fee is taken from a growing balance.
- Fund A at 1.5%₹84.2 lakhFor example, a regular plan, which includes distributor commission.
- Fund B at 0.5%₹95.43 lakhFor example, the direct plan of the same scheme.
Cost is only one part of the picture. Two different schemes can earn very different returns before costs, which this calculator holds equal on purpose.
Related fund tools
A fund's expense ratio comes out of its returns every year, so small gaps compound.
To project a monthly investment at a net return, use the SIP calculator, or the lumpsum calculator for one deposit. The CAGR calculator measures a fund’s past growth from two values.
Common mistakes
Mistake: Thinking a 1% fee costs 1% of your money once.
Instead: It is charged every year on the whole balance, so it compounds.
Mistake: Choosing a scheme on cost alone.
Instead: Compare the scheme’s objective, risk and record as well.
Mistake: Comparing a regular plan’s return with a direct plan’s without noting the fee.
Instead: Check that both returns are for the same plan type.
This calculator shows arithmetic on your assumptions and does not recommend any scheme. Mutual fund investments are subject to market risks. Read all scheme-related documents carefully.
Read how we test our calculators, or browse more money calculators.