compoundcoast
Accumulate · fee drag

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.

S&P 500 total return · asOf 2026-01 CPI-U · asOf 2026-01 2026 tax params · asOf 2025-10 Updated 2026-07-06

Assumptions

live · every start year since 1928
Invested at the start of year 0.
Added at the start of each later year. Set 0 for a one-time lump.
Each historical window of this length becomes one sample.
Account type
Taxable: annual dividend-tax drag + LTCG & NIIT at sale. Traditional: ordinary tax on the whole balance at withdrawal. Roth: no tax.
Filing status
Sets the 2026 bracket thresholds and the NIIT MAGI threshold.
40 bps = 2024 asset-weighted equity mutual fund average (ICI); index funds run ~5–14 bps.
100 bps ≈ typical published human-advisor AUM fee. Enter 0 if self-directed.
Taxable income (after deductions) the gain or withdrawal stacks on top of.
Sizes the annual qualified-dividend tax drag. S&P 500 trailing yield ≈ 1.1% (2026-06); long-run average ≈ 1.6%.
Run the waterfall across every historical start year since 1928.
—
Keep-rate — Gross median — ▼ —
Median path Range across start years (p5–p95)
Set your inputs — this rolls the projection across every historical start year, not one lucky window. The line climbs on after-fee dollars, then steps down at liquidation to real after-tax dollars: the gap between top and bottom is the four leaks. Markets vary, so the honest answer is a range, not one number.

The 4-leak waterfall

median stage values

Indigo = what survives at each stage; the colored chunk is what that leak just removed. Amber = expense ratio, violet = advisory fee, coral = taxes, aqua = inflation. Stages use the median window; ranges are in the readouts below.

Leak decomposition

median drag · p5…p95

Each 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 · p95

Coral = 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 ÷ gross

Every historical start year produces one keep-rate; the spread is why a single-point answer would overstate what you keep.

— Gross, nominal p5–p95
— After fees, pre-tax nominal p5–p95
— After tax, nominal p5–p95
— After tax, real p5–p95
Methodology & sources
Show the math ›
Run the projection to see the worked numbers for your inputs.
Assumptions & sources ›
AssumptionValueSource · 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.

Written by Author to be finalized before launch · Updated 2026-07-06

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