Use our Mutual Fund Calculator below to calculate your mutual fund returns. The calculator is also useful for many other types of investments. Our calculator will help you find returns while factoring in inflation and tax rates.
Mutual Fund Calculator Results Explained
The investment return calculator results show the Invested Total Capital in green, Simple Interest Total in red, and the Compound Interest Total in Blue. You can click on them in the bottom legend to hide or make them visible again.
The mutual fund calculator shows the power of compounding your returns. The longer the timeframe, the more compound interest you earn. Also, the higher the taxes and inflation, the lower the real mutual fund returns. Both taxes and inflation eat away at your investment returns.
Should You Invest in Mutual Funds?
Mutual funds and Systematic Investment Plans are popular for retirement investing but some better investments are available. Our Chief Income Strategist, Marc Lichtenfeld, has listed some of the downsides below…
- Higher expenses: You’re already starting out at a 0.6% disadvantage in the average fund. In many funds, you’ll pay over 1%. That means just to keep pace with the market, the fund needs to beat it by a considerable margin. And that’s not easy to do, because…
- Funds aren’t flexible: A mutual fund has to stick to its mandate. If it’s a large cap fund, it can’t invest in small cap stocks… a value fund won’t buy a momentum/growth stock… etc. As an individual investor, you can diversify your portfolio to include a variety of market caps, sectors and strategies.
- A fund can’t buy small winners: The biggest advantage you have as an individual investor over a mutual fund is the ability to choose some small stocks that can become big winners. A multimillion-dollar mutual fund can’t invest in a small stock without strongly moving shares higher. That would impact their returns, so they mostly ignore small names. As an individual investor, you don’t have to worry about that. Your purchase of even a few thousand shares likely won’t move the market.
- Size matters: Another disadvantage of mutual funds is that in order to accumulate a meaningful position in a stock, it can take days or weeks to buy enough stock. An individual investor can accomplish this in one day.
With these downsides in mind, you might want to consider avoiding mutual funds. And remember, the Mutual Fund Calculator above doubles as an investment return calculator. You can calculate returns on dividend stocks, ETFs, REITs, etc.