Compound Growth & Fee Drag Calculator
See how compounding turns steady contributions into real wealth — then see how a 2% fund fee quietly eats a huge slice of it. Compare a high-MER fund against a low-cost index option, side by side.
Three growth paths
Gross return with no fee, versus your low-cost fund and your high-MER fund. The gap between the lines is money lost to fees.
What built your low-cost balance
Your own contributions versus growth earned on top of them.
Year-by-year
Balance each year under the low-cost fund and the high-MER fund, and the fee gap between them.
| Year | Contributed | Low-cost balance | High-MER balance | Fee gap |
|---|
How this is calculated
Compounding with monthly contributions
Money is compounded monthly for accuracy even though results are shown per year. Each month the balance grows by the monthly rate rm = (1 + annual/100)^(1/12) − 1 and then your contribution is added: balance = balance × (1 + rm) + monthly. Applying the annual return as a compounded monthly rate (rather than dividing by 12) is the mathematically correct way to grow a stream of monthly deposits.
How fees are modelled (the important part)
A fund's MER is charged on the whole balance every year, so it drags directly on your net return: net return = gross return − MER. A fund quoting a 5.2% gross return with a 2.0% MER actually compounds your money at 3.2%; the low-cost fund at 0.2% compounds at 5.0%. Because that gap compounds year after year, the damage grows non-linearly. Over 40 years a 2% MER can consume roughly 40% of your final balance versus a 0.2% index fund — even though in any single year it only costs 2%. The lifetime fee cost shown is the difference between the two final balances: real dollars that left your account as fees instead of compounding for you.
The rule of 72
A quick sanity check: your money doubles in about 72 ÷ return% years. At a 5% net return that's ~14.4 years; bump the net return to 7% and it drops to ~10.3 years. Fees work the same way in reverse — every point of MER stretches your doubling time and pushes your finish line back.
Real vs nominal
By default figures are nominal (raw future dollars). Turn on "today's dollars" to deflate everything by FP Canada's 2.1% long-run inflation assumption: real = nominal ÷ (1 + 0.021)^years. A million dollars 30 years out only buys what about $535,000 buys today, so the real view keeps the numbers honest.
Return presets
Balanced 5.2% is FP Canada's 2026 nominal assumption for a 60/40 portfolio (before fees). TSX 9.5% and S&P 500 12.6% (in CAD) are long-run historical averages — useful for illustration, but not a promise. All figures verified as of July 2026.
What this doesn't model
Taxes (results assume a registered account like a FHSA, TFSA or RRSP where growth compounds untaxed), trading commissions, contribution-room limits, variable returns or market crashes (it uses a smooth average), and rising contributions over time. For account-specific planning try the retirement planner or RRSP vs TFSA tool.