CALCULATOR

FX drag calculator

FX drag is the silent cost of currency conversion: spread/markup, minimums, and repeated conversions. This calculator estimates both the cash cost and the lost compounding from those leaks over time.

FX drag calculator hero banner showing a calculator-style tool that estimates how FX spreads, markups, and currency conversion fees reduce long-term investment returns, with input fields for investment amount, FX cost and years invested, and a results panel showing total FX drag, percent drag, and final value after FX costs.

Fast decision

If you convert EUR→USD every month, a “small” FX markup repeated for years behaves like a recurring fee. Run your numbers, then pick a workflow that keeps conversion friction low and predictable.

Open calculator → Cheapest FX brokers (Europe) → Open Interactive Brokers →

Disclosure: We may earn a commission if you open an account using our links. You do not pay extra.

Educational content only. Not personalized investment advice.

TL;DR

Quick verdict

  • FX drag ≠ FX risk. Drag is what you pay to convert; risk is currency movement.
  • Frequency matters when you have minimums/fixed fees or when friction makes you delay investing (cash drag).
  • Best fix: one clean multi-currency workflow + fewer unnecessary conversions + liquid ETF listings.
  • Don’t churn. Converting back and forth because you “changed your plan” is usually the biggest avoidable leak.

CALCULATOR

Estimate FX drag (cash cost + lost compounding)

Inputs

Results

Total contributions

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Total FX fees paid (nominal)

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Estimated lost compounding on fees

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This is the future value of the fees if they had stayed invested at your chosen return.

Rule-of-thumb interpretation

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Notes:
  • This models conversion drag only (markup + fixed fee). It does not include ETF spread, broker commissions, or taxes.
  • If FX friction makes you delay investing, the real cost can be higher (cash drag).

What this calculator is (and isn’t)

It estimates conversion leakage

  • FX markup/spread: the “worse rate” you get vs mid-market.
  • Fixed fees/minimums: per conversion charges that punish small buys.
  • Lost compounding: fees are money that never stays invested.

It does not model everything

  • ETF spreads: bid/ask is a separate execution cost.
  • Broker commissions/platform fees: add those in a broker total-cost comparison.
  • Tax layers: withholding and local taxes are not included here.

How to reduce FX drag (practical order)

  1. Stop FX churn: don’t convert back and forth because you keep switching plans/tickers/brokers.
  2. Use a clean multi-currency workflow: convert deliberately, hold the currency balance, buy from that balance.
  3. Reduce repeated minimums: if your broker has fixed fees/minimums, consider fewer/larger conversions.
  4. Buy liquid listings: spreads and bad fills can beat “tiny TER differences” in real life.

Related guides (next steps)

Study: FX drag Studies

The mechanics: spread, markup, fixed minimums, churn.
Cheapest FX brokers (Europe) Brokers

Pick the workflow with the least repeated leakage.
Interactive Brokers review Brokers

Multi-currency accounts + transparent FX (check pricing).
Broker fees glossary Learn

Markups, spreads, minimums, custody, lending.
Fees really matter Learn

TER vs spreads vs FX vs fixed fees: the real ranking.
Study: cash drag Studies

If friction delays investing, the cost jumps.

FAQ: FX drag calculator

Is FX drag the same thing as FX risk? +
No. FX risk is currency movement changing your returns. FX drag is what you pay to convert currencies (spread/markup, fees, minimums, churn). You can have FX drag even if FX rates never move.
How do I find my broker’s FX markup? +
Compare the executed conversion rate to a mid-market reference at the same time. Translate the difference into a percentage. Repeat on a normal day (not extreme volatility).
Does conversion frequency matter if the FX cost is only a percentage? +
If it’s purely a percentage and your behavior is unchanged, the total cost is mostly linear with contributions. Frequency matters a lot more when there are fixed fees/minimums or when friction makes you delay investing (cash drag).
If I buy EUR-denominated UCITS ETFs, do I avoid FX drag? +
Often you avoid conversion drag on each buy, yes. But currency exposure still comes from the underlying holdings. Separate “trading currency convenience” from “underlying currency exposure.”
What is the biggest avoidable FX mistake? +
FX churn: converting back and forth because you keep switching plans, tickers, or brokers. One clean setup beats constant “optimization.”
What should I optimize first: TER, tracking difference, spreads, or FX? +
For many non-US investors: FX + spreads (execution) first, then tracking difference, then TER. TER is visible; execution leaks are usually the silent drain.

Next step: pick the lowest-friction FX workflow

A calculator is useful only if it changes the setup. If FX drag looks meaningful for your contribution pattern, use the cheapest-FX broker guide and lock a workflow you can repeat for years.

Cheapest FX brokers (Europe) → Open Interactive Brokers →

Disclosure: We may earn a commission if you open an account using our links. You do not pay extra.

Educational content only. Not personalized investment advice.

This calculator is a planning aid. Results depend on your broker’s actual executed rates, fees, and your behavior. Always verify current pricing and eligibility on the broker’s official site before making decisions.

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