Mutual Fund Calculator

This calculator shows how a mutual fund investment grows over time, accounting for the expense ratio (the annual fee that reduces your return).

• Initial Investment: the lump sum you invest at the start. Many mutual funds have minimum investment requirements of $1,000-$3,000.
• Monthly Contribution: the amount you add each month through automatic investment plans. Consistent contributions smooth out market volatility through dollar-cost averaging.
• Annual Return (Gross): the fund's return before fees. The S&P 500 has averaged about 10% annually before inflation. Use 7-8% for a reasonable long-term assumption.
• Expense Ratio: the annual fee charged by the fund, expressed as a percentage of assets. Low-cost index funds charge 0.03-0.20%. Actively managed funds charge 0.5-1.5% or more. This is deducted continuously from your returns.

The fee impact table shows how much more you would have with a 0.10% index fund versus your current fund's expense ratio.

The net return is simply the gross return minus the expense ratio:

Net Annual Return = Gross Return % - Expense Ratio %

The fund value grows using monthly compounding on the net return:

Balance = Previous Balance × (1 + net rate/12) + Monthly Contribution

Why expense ratios matter so much: on $10,000 growing at 8% gross for 20 years, the difference between a 0.10% and 1.00% expense ratio is nearly $18,000. The fee gap widens exponentially over time because fees compound just like returns do. A 1% expense ratio on $100,000 is $1,000/year today, but on $500,000 (after 20 years of growth), it is $5,000/year. You pay more in fees the more successful your investment becomes.

Example: $10,000 initial + $200/month at 8% gross for 20 years. At 0.5% expense ratio, the final balance is $152,816. At 0.10%, it would be $163,782. The 0.4% fee difference costs $10,966 over 20 years.