# Calculating the ETF cost?

Let's say I invest 1000 USD in an ETF. Over the 10 year period, the shares had 5% annualized gain, meaning the value of my investment would be 1630 USD. However, I didn't take into account ETF fees.

What would be the value of my investment in the following cases:

1. ETF cost is 0.05 % (un-hedged)?
2. ETF cost is 0.10 % (hedged)?

I am trying to see how much would hedging cost me over this period.

Using a tool like https://www.thecalculatorsite.com/finance/calculators/compoundinterestcalculator.php you just compare the values of the expected annualized rate minus the relevant basis point cost in each case and see what the difference is between the two.

• Thanks. Could you recheck the calculation in my answer: does it make sense? Jan 11, 2019 at 12:07
• Yes looks correct. Jan 11, 2019 at 12:12

Using this Calculator and setting up 3 cases:

``````1. annualized interest rate = 5%
2. annualizud interest rate = 5% - 0.05%
3. annualizud interest rate = 5% - 0.10%
``````

The results are (balance):

``````1. \$1,628.89
2. \$1,621.15
3. \$1,613.45
``````

Earnings \$:

``````2. My gain is \$621 and ETF earned \$7.
3. My gain is \$613 and ETF earned \$15.
``````

Earnings %:

``````2. Me: 98.77% ETF: 1.23%
3. Me: 97.54% ETF: 2.46%
``````

In this particular case:

``````ETF 0.05% cost translates to 1.23% of earnings.
ETF 0.10% cost translates to 2.45% of earnings.
``````

It is important to say that the percentage of earning ETF takes:

• doesn't depend on the amount invested
• increases with the investment time