How to use the mutual fund calculator
- Enter your initial investment and the amount you will add every month.
- Enter the expected annual return of the fund's investments before fees, and the number of years.
- Enter the fund's expense ratio, the yearly cost shown in its prospectus or fact sheet.
- Enter the front-end load (sales charge), if the share class has one. Use 0 for a no-load fund.
The results compare the ending value after fees with the same plan at no cost, and show the sales charges, expense-ratio costs and the total cost including growth you lose.
How fees are applied
A front-end load is a percentage taken from every purchase before it is invested, so a 3% load on $300 means only $291 buys fund shares. The expense ratio isn't billed to you; the fund takes it from its assets, a little each day, so it shows up as a lower return. The calculator charges one twelfth of it each month. The comparison runs the same contributions with no load and no expense ratio, so the difference includes the growth that the fees would have earned.
Worked example
The defaults are $10,000 to start plus $300 a month for 20 years, at a 7% return before fees, with a 0.5% expense ratio and a 3% front-end load.
- Loads: $300 of the first $10,000 and $9 of every $300 go to sales charges, so $9,700 and then $291 a month are invested. Total loads: 3% × $82,000 = $2,460.00.
- Monthly growth: 1.07^(1/12) − 1 = 0.565415%. After the expense charge, each month multiplies the balance by 1.00565415 × (1 − 0.005 ÷ 12) = 1.0052351.
- After 240 months: $9,700 × 1.0052351240 + $291 × (1.0052351240 − 1) ÷ 0.0052351 = $173,004.16.
- With no fees the same plan reaches $190,957.76, so the fees cost $17,953.60: $2,460.00 in loads, $7,480.93 in expense-ratio charges, and the rest in growth those dollars never earned.
The expense ratio cuts the fund's yearly return from 7% to about 6.47%.
How much different fees cost
| Load | Expense ratio | Ending value | Cost vs. no fees |
|---|---|---|---|
| 0% | 0.00% | $190,957.76 | none |
| 0% | 0.50% | $178,354.81 | $12,602.95 |
| 3% | 0.00% | $185,229.02 | $5,728.74 |
| 3% | 0.50% | $173,004.16 | $17,953.60 |
| 0% | 1.00% | $166,724.53 | $24,233.23 |
| 3% | 1.00% | $161,722.79 | $29,234.97 |
All rows use the example's $10,000 plus $300 a month at 7% for 20 years. Over long periods the expense ratio does more damage than the load, because it is charged on the whole balance every year while the load is charged only once on each dollar. Over short periods the load matters more.
Frequently asked questions
What is a good expense ratio?
Lower is better, because every fraction of a percent comes straight out of your return: in the table above, going from 0.5% to 1% costs over $11,000. Broad index funds are usually among the cheapest, while actively managed funds tend to cost more. Compare a fund with similar funds and check the fee table in its prospectus. The SEC's bulletin on mutual fund and ETF fees and expenses explains each charge.
What is the difference between Class A, C and no-load shares?
Class A shares usually charge a front-end load, often reduced at larger investment amounts (breakpoints). Class C shares typically have no front-end load but higher yearly costs, and may charge a fee if you sell early. No-load funds charge no sales commission. To compare a share class with a yearly charge, add it to the expense ratio here and set the load to 0.
Does the calculator include taxes?
No. Taxes on fund distributions and on gains when you sell depend on your account type and tax situation. In an IRA or 401(k) they are deferred or avoided, so the result here is close to the pre-withdrawal value.
Why is the expected return before fees?
Fund fact sheets often report returns after fees have already been taken. If you enter an after-fee return and also an expense ratio, you count the fee twice. Use a before-fee return, such as an index's long-run return, when you enter the fund's expense ratio.
Related calculators
- Investment Calculator — Project an investment's end value, or find the contribution, return, starting amount or time a target needs.
- Compound Interest Calculator — How a starting balance and monthly contributions grow, with any compounding frequency.
- Average Return Calculator — Arithmetic and geometric average returns from yearly results, or the CAGR from a start and end value.
- ROI Calculator — Return on investment as a percentage, the gain or loss, and the annualized ROI from a length or two dates.
Results are estimates for educational purposes and are not financial, tax or legal advice. See our disclaimer.