1. What is the Investment Growth Formula?

The investment growth formula calculates the future value of an investment accounting for annual returns and fees. It shows how fees impact long-term growth potential.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( P \) — Principal investment amount ($)
• \( r \) — Annual return rate (decimal)
• \( f \) — Annual fee rate (decimal)
• \( n \) — Number of years

Explanation: The formula compounds the net return (return rate minus fee rate) over the investment period.

3. Importance of Fee Calculation

Details: Even small differences in fees can significantly impact long-term investment growth due to compounding effects.

4. Using the Calculator

Tips: Enter principal in dollars, rates as decimals (5% = 0.05), and whole number of years. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: Why include fees in the calculation?
A: Fees directly reduce your net return and compound over time, significantly impacting long-term growth.

Q2: What's a typical investment fee?
A: Index funds often charge 0.05%-0.20%, while actively managed funds may charge 0.50%-2.00%.

Q3: How do fees affect returns?
A: A 1% fee over 30 years can reduce final value by ~25% compared to a 0.1% fee.

Q4: Should I always choose the lowest fee?
A: While important, also consider investment strategy, risk, and performance net of fees.

Q5: Does this account for inflation?
A: No, this shows nominal returns. For real returns, subtract inflation rate from return rate.