Stock Picking vs Index Fund

Model the long-run outcome of active stock picking versus passive indexing, accounting for fees, taxes, and trading friction.

Starting Portfolio ($)

Monthly Contribution ($)

Time Horizon 25 years

Active Stock Picking

Self-directed or actively managed

Expected Gross Return 8.0%

Expense/Advisor Fee 1.0%

Tax Drag (turnover) 0.8%

Index Fund (Passive)

Low-cost broad-market index

Expected Gross Return 8.0%

Expense Ratio 0.04%

Tax Drag (low turnover) 0.1%

Active Portfolio Value

—

net of fees & tax drag

Index Portfolio Value

—

net of fees & tax drag

Winner Over Your Time Horizon

—

Balance Growth — Active vs. Index

Over 20-year periods, roughly 90% of active fund managers underperform their benchmark index after fees. To beat index investing consistently, an active approach needs to generate excess returns large enough to overcome its fee and tax disadvantage — a very high bar historically.

Stock vs Index Fund Comparison

The Stock vs Index Fund Comparison quantifies the long-run outcome of active stock picking versus passive index investing after fees, taxes, and trading friction are honestly accounted for. Enter a starting portfolio, monthly contribution, and time horizon, then configure independent assumptions for each strategy in two side-by-side columns: gross return, expense ratio or advisor fee, and tax drag from turnover. The calculator computes the net return after all drags for both paths, projects each portfolio forward over your full horizon, and declares a clear winner with the dollar and percentage gap between the two outcomes. A dual-line growth chart tracks both balances so you can see exactly where and why one path pulls ahead. It's the calculator that replaces overconfident stock-picking intuition with the actual math and shows why roughly 90% of active managers underperform their index benchmark over 20-year windows.