A fund or account fee of around 1% a year looks small. Investor.gov, the US Securities and Exchange Commission’s investor education site, says that $100,000 growing 4% a year for 20 years ends at about $208,000 with a 0.25% annual fee, $198,000 with 0.50%, and $179,000 with 1.00% — a gap of about $29,000 between 0.25% and 1%. Enter an amount, return, fee and period below to see what fees take. This sets out Investor.gov’s “Understanding Fees”.
1. $100,000 at 4% for 20 years — about $208,000 at 0.25%, $198,000 at 0.50%, $179,000 at 1.00%.
2. The best advice is to ask questions — “How much does this investment have to increase in value before I break even?”
3. Fees come under many names — sales charges, management fees, total operating expenses and more.
Updates as you type. Each year the balance grows by the return, then the fee comes off that balance. We checked that this method reproduces all three results in the SEC example ($100,000, 4%, 20 years); the SEC doesn’t state the formula. Tax, inflation and changing returns aren’t included.
The SEC example — only the fee changes
| Annual fee | Investor.gov after 20 years | Our recalculation (×1.04 × (1 − fee) yearly) |
|---|---|---|
| 0.25% | about $208,000 | $208,413 |
| 0.50% | about $198,000 | $198,211 |
| 1.00% | about $179,000 | $179,213 |
| (no fee) | — | $219,112 (ours) |
Investor.gov gives results, not a formula. Growing 4% then taking the fee off each year matches all three; subtracting the fee from the return (4% − 1% = 3%) gives $180,611 at 1.00%, which doesn’t match “about $179,000”. So the calculator uses the first method.
In won — our example
| Annual fee | 10 million won, 5%, 20 years | Gap vs no fee |
|---|---|---|
| 0% | 26.53m won | — |
| 0.2% | 25.49m won | 1.04m won |
| 0.5% | 24.00m won | 2.53m won |
| 1.0% | 21.70m won | 4.83m won |
| 1.5% | 19.61m won | 6.92m won |
The amount, rate and fee steps are our example, rounded. Real returns vary year to year and tax applies.
The names fees go by — Investor.gov
| Name in the source | What it is (our gloss) | Worth noting |
|---|---|---|
| Sales Charge (Load) | A charge when you buy or sell | Close to Korean front- or back-end sales fees (our gloss) |
| Management Fee | What the manager takes for running the fund | — |
| Total Annual Fund Operating Expense | All yearly running costs | Close to Korea’s “total fee” (our gloss) |
| 12b-1, Distribution Fees | Fees for selling and marketing | A US fund feature |
| Redemption, Exchange, Account, Purchase Fee | Charges when you redeem, switch, hold or buy | — |
We didn’t read Korean fee disclosure rules this time. ETF total fees are in ETF basics.
Questions to ask — Investor.gov
- How much does this investment have to increase before I break even?
- What are the total costs to buy and sell?
- Are there ways to avoid fees?
- Are there ongoing account fees?
- How does the person recommending it get paid?
Checklist
- ☐ Find the annual fee as a number
- ☐ Put it in the calculator to see the 20-year gap
- ☐ Check buying, selling and account costs too
- ☐ Ask how the adviser is paid
Questions that remain
Don’t high returns make fees irrelevant?
Try changing the return in the calculator: the fee comes off the balance at the same rate every year whatever the return, so the gap grows with time (our gloss).
How is compounding itself calculated?
Compounding and the rule of 72 are in compound interest calculator.
Sources
- US SEC Investor.gov — Understanding Fees — source (no published or updated date shown; checked 19 October 2026). The three fee results for $100,000 at 4% over 20 years, fee names, questions to ask.
- Not read. Korean fee disclosure rules for financial products.
- What we added. The “worth noting” column and the Korean everyday gloss.
Where else to check
- The product prospectus — total fees and sales charges.
Written on 19 October 2026. The content is from the source; the glosses are ours.
