The quick answer
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An annual percentage fee applies to an investment balance, so the dollar amount changes as the balance changes. A fixed charge behaves differently, particularly on small accounts. Compare all relevant costs on the same balance and time period, then check whether the return already includes them. A projected balance gap includes growth no longer earned as well as fees; it is not the cash paid to an adviser.
The missing question is “a percentage of what?”
A fee of 0.5% sounds small until the balance is named. On an unchanged $20,000 it is $100 a year; on $200,000 it is $1,000. Those are simple annual illustrations. Actual fees may be calculated on daily balances, charged at other intervals or reflected in the unit price rather than appearing as one transaction.
Find the fee base in the product disclosure. Is it the account balance, contributions, a transaction amount or a particular investment option? A 2% contribution fee and a 2% annual management cost are not interchangeable. One applies when money enters; the other may recur while it remains invested.
Write the percentage beside the base and frequency. Without those details, two apparently identical numbers may describe different costs. Avoid treating every percentage in a fee table as something that should simply be added together.
Fixed fees can dominate a small account
Imagine a fictional platform charging $120 annually plus 0.2% of the balance. With $5,000 held unchanged, the percentage part is $10 and the total is $130, equivalent to 2.6% of that starting balance. With $100,000, the total is $320, equivalent to 0.32%.
An alternative charging only 0.4% would cost $20 on $5,000 and $400 on $100,000 under the same simplified assumptions. The equal-cost balance is $60,000: $120 divided by the 0.2 percentage-point difference. This is a cost comparison, not a product recommendation.
Features, risk and service still matter. A cheaper account may not offer the same investments or administration. The example demonstrates why comparing only the percentage column can reverse the apparent conclusion for a person with a different balance.
| Balance | $120 plus 0.2% | Effective percentage | 0.4% only |
|---|---|---|---|
| $5,000 | $130 | 2.6% | $20 |
| $60,000 | $240 | 0.4% | $240 |
| $100,000 | $320 | 0.32% | $400 |
Read the whole cost chain
MoneySmart’s managed-fund fee calculator distinguishes management costs, other fixed costs, contribution fees and advice costs. It also states limitations, including that its standard model does not cover every brokerage or tax effect. An advertised fund fee therefore may not describe the entire cost of owning the investment.
Depending on the arrangement, there may also be brokerage, a platform fee, a buy/sell spread, currency conversion or other transaction costs. Ask which charges are included in the quoted ongoing figure and which are additional. Do not count an underlying charge twice when it is already incorporated in another disclosure.
Build a short cost map from your cash account through the platform to the underlying investment. For each stage, note the relevant document and the event that creates a cost. This is easier to maintain than one unexplained “total fee” copied from a comparison site.
Compare dollars using the same assumptions
Suppose two fictional funds have identical investments and a $50,000 constant balance for a one-year illustration. One costs 0.25%, or $125, and the other 0.75%, or $375. The difference is $250. That is the useful first calculation before building a decades-long projection.
Real balances move because of returns, deposits and withdrawals. A fee deducted throughout a year will not exactly equal the opening balance multiplied by the annual percentage. Ask whether a disclosed dollar example uses a standard sample balance rather than your own expected balance.
For a personal comparison, use one starting balance, one contribution schedule and one period for both options. If one scenario receives an additional contribution or uses a different gross return, the resulting gap cannot be attributed entirely to fees.
A future balance gap includes foregone growth
Consider $10,000 growing for two years, with no additions. At an assumed 5% annual net growth rate it becomes $11,025. At 4% it becomes $10,816. The difference is $209. The one-percentage-point difference acts on a changing balance, and the money lost in the first year also misses later growth.
That $209 should not be described as $209 paid in cash to a financial intermediary. It is the difference between two simplified ending balances. Actual charges and the investment growth affected by those charges are related but distinct quantities.
This distinction becomes more important over longer periods. A dramatic chart can be useful without an exaggerated claim about cash handed over. Label it as a modelled balance difference and keep the gross-return, fee and timing assumptions available for inspection.
Check whether performance is already after fees
A return shown on a fund page may already allow for certain fees but exclude personal tax or platform costs. Another page might quote a benchmark before those deductions. Comparing the two without reading their definitions can make a fee look counted when it is not, or remove it twice.
MoneySmart’s investment-tracking guidance encourages checking value changes, income and costs together. Keep the period and calculation basis consistent. A percentage return over one financial year is not directly comparable with a cumulative return over several years.
Ask a provider to explain the specific return figure you are using. “After fees” should lead to a follow-up: which fees? Preserve that answer with the projection. It is more reliable than assuming every published performance number follows the same convention.
Include the service decision without inventing a benefit
A paid service may provide administration, advice or features a household values. Record what it actually does and what it costs. Avoid assuming that a higher fee automatically buys a higher investment return, or that a low fee proves the underlying investment is appropriate.
If the service includes advice, distinguish the advice fee from investment management and platform costs. Ask whether it is a flat charge, an ongoing balance percentage or a one-off engagement. Check what review or support is included and how the arrangement can end.
Then assess the service on its stated purpose. A clear fixed task can be compared with alternatives more honestly than a vague claim that the fee “pays for itself.” No calculator can independently verify that an adviser’s service will create a particular financial benefit for you.
Use a fee review you can repeat
Gather the current disclosure, latest statement and any separate service agreement. Translate the costs into an annual dollar illustration using a realistic balance, then note transaction costs that depend on your activity. Keep verified charges separate from items still needing clarification.
Elaris’s Freedom Clock can show how a selected fee assumption changes a smooth projection. It does not audit a product disclosure, reproduce every charging method or determine whether a service is worth its price. If the entered return already includes a cost, do not subtract it again.
Review the worksheet after a material balance change or a new fee schedule. A fixed fee that was acceptable on a large account may matter differently after a withdrawal. The point is a consistent comparison you can explain, rather than a one-time search for the smallest advertised percentage.
Check the charging period against the balance example. If a large contribution arrives near year end, applying the annual percentage to the final balance for the entire year can overstate that year's fee. Conversely, using a low opening balance may understate costs after an early contribution. For an estimate, document the balance path or a reasonable average; for an actual review, use the provider's charge record. This helps distinguish an imperfect illustration from a genuine billing discrepancy.
FAQ: Are basis points different from percentages?
One basis point is 0.01 percentage points. A charge of 25 basis points is 0.25%. On a constant $40,000 balance, that is $100 for a simple full-year illustration. Keep percentage points separate from a percentage change in an existing fee, because those are different calculations.
FAQ: Does the lowest management fee mean the lowest cost?
Not necessarily. Platform charges, fixed fees, transaction costs and other disclosed expenses may change the overall amount. Compare the complete arrangement on the same balance and activity assumptions. Cost is one consideration alongside investment exposure, access, risk and the service you actually need.
FAQ: Can I deduct every investment fee from tax?
Do not assume so. The tax treatment depends on the expense, investment and circumstances; some amounts may have different treatment or form part of a cost base. Use current ATO guidance and a registered tax agent for your position. A fee comparison is not a tax calculation.
Source: MoneySmart: investing and tax
FAQ: What should the chart call a long-term fee gap?
Call it a modelled ending-balance difference, and explain that it includes foregone growth. Show the assumptions and period. If actual cash fees are also calculated, display them separately rather than presenting the larger balance difference as the amount paid to a particular person.
Put the next step into practice
Use your own confirmed figures and keep outstanding questions visible. Core tools are free, with no bank connection or compulsory account.
Open the Freedom Clock ↗Sources and editorial notes
Sources checked 24 October 2026. Worked examples are fictional illustrations. Rules, eligibility and product terms can change; use the official source for your circumstances.
- MoneySmart: managed funds fee calculator ↗
- MoneySmart: track your investments ↗
- MoneySmart: investing and tax ↗
General information, not an individual financial or legal assessment. AI-assisted drafting with source checks; independent professional review has not been completed. How we prepare our guides · Suggest a correction