Investment growth after taxes & fees — the 4-leak waterfall
A gross index return is not what you keep. Four leaks sit between the market and your pocket — expense ratio, advisory fee, account taxes, inflation — and most calculators show none of them. This rolls a taxable / traditional / Roth account across every historical start year since 1928 and headlines the keep-rate: real after-tax cents surviving per gross dollar. Illustrative projection, not a forecast.
The 4-leak waterfall
median stage valuesGreen = what survives at each stage; the colored chunk is what that leak just removed. Amber = expense ratio, dark green = advisory fee, coral = taxes, lime = inflation. Stages use the median window; ranges are in the readouts below.
Leak decomposition
median drag · p5…p95Each bar is that leak's median dollar drag over the horizon, with its share of the gross ending value and the p5…p95 range across start years.
Real after-tax ending value range
p5 · median · p95Coral = 5th-percentile downside, green = median, lime = 95th-percentile upside — real (today's) dollars after all four leaks. The band spans the gross (no-leak) range for the same windows.
Keep-rate across start years
real after-tax ÷ grossEvery historical start year produces one keep-rate; the spread is why a single-point answer would overstate what you keep.
Show the math ›
Assumptions & sources ›
| Assumption | Value | Source · asOf |
|---|---|---|
| Equity return | S&P 500 total return, 1928–2025 | Damodaran (NYU Stern), annual · asOf 2026-01 · dividends reinvested |
| Inflation | CPI-U, Dec/Dec | BLS · asOf 2026-01 · deflates each window's terminal to real dollars |
| Ordinary & LTCG brackets, standard deduction | Tax year 2026 | IRS Rev. Proc. 2025-32 · asOf 2025-10 · gain/withdrawal stacked over other taxable income |
| NIIT | 3.8% · lesser-of rule | IRC §1411, Form 8960 · asOf 2025-10 · statutory thresholds, not indexed; MAGI ≈ other taxable income + standard deduction + gain (approximation) |
| Expense ratio default | 40 bps | ICI, Trends in Expenses and Fees of Funds 2024 · asOf 2025-03 · asset-weighted equity mutual fund average; index funds ~5–14 bps |
| Advisory fee default | 100 bps | Kitces Research / Datos–Envestnet fee studies · asOf 2026-01 · typical published AUM fee; set 0 if self-directed |
| Dividend yield default | 1.1%/yr, assumed qualified | multpl (S&P DJ Indices data) · asOf 2026-06 · sizes the taxable annual dividend-tax drag |
| Not modeled (v1) | state tax · NIIT on annual dividends · basis step-up at death · tax-loss harvesting · staged withdrawals | each would change the tax leak; the single-year lump liquidation shown is a deliberately simple illustration |
All three account types grow the same contributed dollars, so the comparison isolates tax treatment — it does not model the different up-front tax cost of Roth vs traditional contributions. Tax brackets are held at 2026 law for the whole horizon; future law is unknowable, which is one more reason the output is a range, not a promise.
Common questions
How much of my investment return do I keep after taxes and fees? ›
The calculator headlines a keep-rate: the real, after-tax cents that survive per gross dollar of return. It rolls a taxable, traditional, or Roth account across every historical start year since 1928 and reports the keep-rate as a distribution rather than one figure, because each start year produces a different result. The gap between the gross path and the real after-tax ending value is the combined size of the four leaks.
What reduces investment growth besides market losses? ›
This page models four leaks sitting between a gross index return and your pocket: the fund expense ratio, the advisory fee, account taxes, and inflation. The waterfall shows each stage's median value and the chunk that leak removed, and the decomposition bar reports each drag in dollars with its p5 to p95 range across start years. Every basis point of fee and every tax dollar comes out before inflation deflates the rest to today's dollars.
How do taxable, traditional, and Roth accounts differ for taxes? ›
In this model a taxable account carries an annual qualified-dividend tax drag plus long-term capital-gains tax and the 3.8 percent NIIT at sale. A traditional account pays ordinary income tax on the whole balance at withdrawal, and a Roth pays none. All three grow the same contributed dollars, so the comparison isolates tax treatment using 2026 brackets and does not model the different up-front tax cost of Roth versus traditional contributions.
How much do fund fees and advisor fees cost over time? ›
The calculator separates two fee leaks. Its default expense ratio is 40 basis points, the 2024 ICI asset-weighted equity mutual fund average, though index funds run roughly 5 to 14 basis points. The default advisory fee is 100 basis points, a typical published AUM fee, set to 0 if self-directed. Both drag on the invested return every year, and each is shown as a median dollar drag with a p5 to p95 range across start years.
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