Your assumptions
Illustrative starting example. Replace the sample values with numbers from your own statements whenever possible. For the cleanest fee comparison, leave tax drag at 0% on your first run, then test a second scenario with a tax-drag assumption.
The amount of investments you want this comparison to cover.
How long you want to compare the two approaches.
Future dollars show the projected account amounts at that time. Today's dollars adjust those amounts for inflation so they are easier to compare with purchasing power now.
Used only for the today's-dollar view. It does not change the investment return assumptions.
How much you assume investment prices rise each year, before fees and taxes. This does not include dividends.
Cash paid by investments as dividends. It is entered separately so dividends are not counted twice.
How much you plan to take from the portfolio each year for spending. Enter 0 if you are still accumulating.
Raises future withdrawals to reflect higher living costs.
Year 1 means withdrawals start during the first year of the projection.
Current arrangement
The annual cost charged inside mutual funds and ETFs. The 0.50% starting value is only an illustration — replace it with your actual weighted expense ratio if you know it.
Optional. A simplified estimate of how much taxes reduce your investment return each year in a taxable account. It rolls the effect of realized gains, taxable dividends, interest, and distributions into one annual percentage.
What is “tax drag,” and what number should I use?
Tax drag is the reduction in investment return caused by taxes generated in a taxable account. Realized capital gains, interest, dividends, and fund distributions can all create taxes. There is no single “typical” percentage because it depends on your holdings, trading activity, income, tax bracket, losses, and state taxes.
For a first run: leave this at 0.00% to isolate advisor and fund fees. Then run a sensitivity test at 0.25%, 0.50%, or 1.00%. Those buttons are illustrative scenarios, not tax-rate recommendations. Higher-turnover or tax-inefficient portfolios can experience materially larger drag.
How to estimate your own number: a rough starting point is annual investment taxes attributable to this account divided by the average account value, then multiplied by 100. Example: $5,000 of investment-related taxes on an average $1,000,000 balance is roughly 0.50%. Because taxes can be deferred and gains/losses vary by year, this is only an estimate.
Why a bill can appear when you did not personally sell: mutual funds can distribute gains realized from trades inside the fund; an advisor can realize gains by trading holdings in your taxable account; and dividends or interest can be taxable even when reinvested.
For a first run: leave this at 0.00% to isolate advisor and fund fees. Then run a sensitivity test at 0.25%, 0.50%, or 1.00%. Those buttons are illustrative scenarios, not tax-rate recommendations. Higher-turnover or tax-inefficient portfolios can experience materially larger drag.
How to estimate your own number: a rough starting point is annual investment taxes attributable to this account divided by the average account value, then multiplied by 100. Example: $5,000 of investment-related taxes on an average $1,000,000 balance is roughly 0.50%. Because taxes can be deferred and gains/losses vary by year, this is only an estimate.
Why a bill can appear when you did not personally sell: mutual funds can distribute gains realized from trades inside the fund; an advisor can realize gains by trading holdings in your taxable account; and dividends or interest can be taxable even when reinvested.
Want a better estimate than a guessed percentage? Use the Terra Tax Drag Reality Check to enter 1099-DIV amounts, realized gains, and your own tax-rate assumptions. Then bring the resulting annual tax-drag percentage back here.
Choose “single blended rate” if your statement or advisory agreement gives you one overall annual percentage.
Yes — 1.00 means 1.00% of the portfolio per year, not $1.00. The actual dollar fee changes as your balance changes.
Lower-cost comparison
What is this? This is simply the lower-cost scenario you want to compare against. It could represent a self-managed index portfolio, a robo-advisor, or a flat-fee/low-fee advisor. It is not a recommendation.
Example: 0.10% is about $100 per year for each $100,000 invested.
Enter 0% if the comparison has no percentage-based advisory fee.
Use the same tax-drag assumption as the current portfolio unless you expect the alternative to be more or less tax-efficient.
Projected results
Fees paid — current arrangement
$0
Estimated advisor fees plus fund expenses paid during the projection.
Projected value gap
$0
Difference in total modeled value between the two arrangements. Includes ending assets plus cash income and portfolio withdrawals received along the way.
Advisor return hurdle
0.00%
How much extra annual return the current arrangement would need to overcome its higher modeled costs.
Growth those extra fees could have earned
$0
This isolates the estimated compounding effect of the additional fee burden by holding the investment, tax, dividend, and withdrawal assumptions the same.
How to read these results. Both portfolios are assumed to earn the same market return. The tool does not credit the advisor with beating the market — instead, the “extra return required” figure shows exactly how much outperformance the advisor would need to deliver, every year, just to break even after fees. Whether an advisor is worth that hurdle is your call; this tool only makes the cost side visible. Estimates are educational, not a forecast or investment advice. Tax drag is a simplified annual return-reduction input, not a tax-return calculation and not a prediction of your actual tax bill.
Now put the number in context.
Cost is only half the decision. Read how percentage fees compound, what services may justify the cost and which questions to ask before comparing arrangements.
Current ending portfolio$0
Alternative ending portfolio$0
Advisor fees paid$0
Current fund expenses paid$0
Modeled tax drag — current$0
Alternative fees / costs$0
Modeled tax drag — alternative$0
Additional direct costs vs. alternative$0
Cash income received (current)$0
Portfolio-funded withdrawals$0
Portfolio value over time
Dividend handling: price appreciation and dividend yield are modeled separately. Reinvested dividends grow the portfolio; cash dividends are paid out as income and can offset your spending need. The annual projection column reports the dividends generated in either mode and changes its heading to show whether those dividends were reinvested or received as cash. The separate “Cash income received” summary remains $0 when dividends are reinvested. This avoids counting dividends twice. In cash mode, the Projected Value Gap includes the cash income each arrangement paid you, so the comparison stays fair.
Annual projection
| Year | Current balance | Alternative balance | Advisor fees | Current fund costs | Dividends reinvested | Investment sales for spending |
|---|
Educational estimate only — results depend entirely on your assumptions and do not predict investment performance, taxes, or the value an advisor may add. Calculations run monthly and recalculate percentage-based fees from the changing balance. Withdrawals are modeled at year-end for simplicity.
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