Mutual Fund Calculator

How to use this calculator

1. Enter or choose initial investment.
2. Enter or choose monthly investment.
3. Enter or choose expected return before costs (per year).
4. Enter or choose expense ratio.
5. Enter or choose front-end sales load.
6. The value after costs updates as you type. Use Copy result or Share to keep it.

Method

Each month: Value = Value × (1 + i) + Contribution × (1 − Load), with i = ((1 + g) × (1 − ER))^(1/12) − 1; Cost of fees = Value with no costs − Value after costs

g

expected yearly return before costs

ER

expense ratio

Load

front-end sales charge on each purchase

Worked example

1. Net growth per year = 1.07 × (1 − 0.01) = 1.0593.
2. After costs: 10,000 × 1.0593^10 = 17,790.56.
3. With no costs: 10,000 × 1.07^10 = 19,671.51.
4. Cost of the 1% expense ratio = 19,671.51 − 17,790.56 = 1,880.95.

A 1% expense ratio turns $10,000 growing at 7% into $17,790.56 instead of $19,671.51 after 10 years: $1,880.95 in total costs.

What the result means

The cost of fees grows faster than the fees themselves, because money paid in fees no longer compounds. When two funds hold similar investments, the cheaper one usually leaves you with more.

Assumptions and limits

• The return before costs is constant every year.
• The expense ratio is deducted from assets continuously; the sales load is deducted from every purchase.
• Contributions are made at the end of each month and all distributions are reinvested.
• Deferred sales charges, account fees, trading costs inside the fund and taxes are not included.
• Real returns vary year to year; the order of returns matters when you contribute regularly.

Sources

• U.S. SEC Investor.gov