The Mutual Fund Calculator estimates the end balance of a mutual fund investment after sales charges (loads), operating expenses and regular contributions.
End balance: $90,251.04
| End balance | $90,251.04 |
| Total contributions | $80,000.00 |
| Total return | $10,251.04 |
| Total fees and expenses | $2,956.23 |
| Return on investment | 12.81% |
A mutual fund pools money from many investors and invests it in stocks, bonds or other assets according to a stated strategy. Each investor owns shares of the fund, whose value (net asset value, NAV) is calculated once a day. Funds offer diversification and professional management at a cost.
A front-end load (sales charge) is taken from each purchase, so a 2% load on $1,000 invests only $980. A deferred sales charge (back-end load) is taken when you sell, often falling to zero after several years. The expense ratio covers management and running costs and is deducted from the fund's assets every day; 0.5% a year sounds small but compounds over decades.
Every month the calculator adds your contribution minus the sales charge, grows the balance by the monthly equivalent of the rate of return, and deducts one-twelfth of the operating expense. At the end it subtracts any deferred sales charge. Total fees include loads and expenses.
Worked example (defaults): $20,000 plus $1,000 a month for five years at 5% with a 2% load and 0.5% expenses. You contribute $80,000 and end with roughly $87,000; fees take a few thousand dollars.
Low-cost index funds and exchange-traded funds track a market index instead of trying to beat it, often with expense ratios below 0.1% and no loads. Over long periods most actively managed funds fail to beat their index after fees, which is why cost is one of the best predictors of future returns.
What are share classes? Class A shares usually have a front load, class C a level yearly charge, and institutional or no-load classes neither.
Are mutual fund returns guaranteed? No; the rate of return is only an assumption.
How are funds taxed? Distributions of dividends and capital gains are taxable each year in ordinary accounts.