When constructing a long-term investment portfolio, most retail investors look purely at expense ratios and asset performance. A silent, more destructive force is often completely overlooked: tax drag. Taxes on dividends and realized capital gains melt your compounding momentum year after year.
For instance, if your index fund yields 2% in dividends and you pay a 15% dividend tax, you lose 0.3% of your return annually. Over 30 years, this small drag costs you tens of thousands of dollars in lost compounding opportunities.
Using this simulator, you can compare a standard taxable brokerage account against a tax-free wrapper to see the exact wealth loss after 30 years.
Solve it now with our interactive calculator
Tax-Free Account (30 yrs):
$1,223,456
Taxable Account (30 yrs):
$1,098,765
Lost Compound Wealth to Tax Drag:
$124,691
Want to run your own advanced scenario analysis?
Configure custom inflation pegs, tax savings wrappers, and geographical cost comparisons in the NovaPlan Sandbox.
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