acalculator

What will my index fund grow to?

Enter what you invest, what you add each month, an expected return and the fund’s expense ratio. Compare it with a fund that charges more.

Your numbers

An estimate: no index return is looked up.
Index fund value
$653,984.17

$10,000.00 plus $500.00 a month at 7% a year, with a 0.05% expense ratio, grows to $653,984.17 in 30 years.

Money put in
$190,000.00
Growth
$463,984.17
Expenses paid
$3,464.21
Value in the higher-fee fund
$537,957.29
Kept by the lower fee
$116,026.88
Months
360

Index fund value: $653,984.17. $10,000.00 plus $500.00 a month at 7% a year, with a 0.05% expense ratio, grows to $653,984.17 in 30 years.

Index fund against the higher-fee fund

How does it grow?

What does each year look like?

The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use

How to calculate

Computes the growth of an index fund investment with monthly additions at an expected return after its expense ratio, and how much more it keeps than a fund with a higher expense ratio.

Example with the default inputs (Initial investment $10,000.00, Added each month $500.00, Expected return (yearly) 7%, Expense ratio 0.05%, Years 30, Compare with an expense ratio of 1%): $10,000.00 plus $500.00 a month at 7% a year, with a 0.05% expense ratio, grows to $653,984.17 in 30 years.

Method: Each month: value × (1 + R)^(1/12), less a twelfth of the expense ratio on that, plus the monthly addition; the comparison fund runs the same with its own expense ratio.

  • The index return is the same every year; real index returns go up and down, and past returns do not predict future ones.
  • Additions are made at the end of each month.
  • Taxes, trading costs and tracking error are not included. This is an estimate, not investment advice.

Machine-readable copies: Markdown, JSON.

Worked examples

Each example is checked against the calculator on every build.

  1. Initial investment $100,000.00, Added each month $0.00, Expected return (yearly) 4%, Expense ratio 0.25%, Compare with an expense ratio of 1%, Years 20 gives Index fund value $208,424.99, Value in the higher-fee fund $179,379.03, Kept by the lower fee $29,045.96.Source: SEC Investor Bulletin, How Fees and Expenses Affect Your Investment Portfolio: about $208,000 with a 0.25% fee and $179,000 with 1% after 20 years (https://www.investor.gov/sites/default/files/ib_fees_expenses.pdf)
  2. Initial investment $0.00, Added each month $500.00, Expected return (yearly) 7%, Expense ratio 0%, Years 30 gives Index fund value $584,726.30, Money put in $180,000.00.Source: Future value of monthly additions at the monthly rate (1 + R)^(1/12) − 1 (Microsoft Excel FV function, https://support.microsoft.com/en-us/office/fv-function-2eef9f44-a084-4c61-bdd8-4fe4bb1b71b3)
  3. Initial investment $10,000.00, Added each month $500.00, Expected return (yearly) 7%, Expense ratio 0.05%, Compare with an expense ratio of 1%, Years 30 gives Index fund value $653,984.17, Value in the higher-fee fund $537,957.29, Expenses paid $3,464.21.Source: SEC Investor Bulletin, How Fees and Expenses Affect Your Investment Portfolio: an ongoing fee reduces the value (https://www.investor.gov/sites/default/files/ib_fees_expenses.pdf)

How the index fund value is worked out

Inputs. Initial investment, an amount added each month (an empty one counts as $0), the expected yearly return R of the index before expenses, the fund's expense ratio E, the years, and an optional comparison expense ratio C.

Each month, for 12 × years months, starting from the initial investment:

  1. Grown value = value × (1 + R)^(1/12), so a year compounds to exactly R before expenses.
  2. Expense = grown value × E ÷ 12.
  3. New value = grown value − expense + the monthly addition (added at the end of the month).

The comparison fund starts from the same initial investment and runs the same steps with C in place of E.

Results.

  • Index fund value after the last month.
  • Money put in = initial investment + addition × 12 × years.
  • Growth = index fund value − money put in.
  • Expenses paid = every month's expense added up.
  • Value in the higher-fee fund and kept by the lower fee = index fund value − comparison value, shown only when the comparison expense ratio is filled in.

Limits. Initial investment from $0 to $1 billion; monthly addition from $0 to $100 million; return from −50% to 50% a year; each expense ratio from 0% to 5%; 1 to 60 years.

Display. Money to the cent, rounded half up from the value worked out; nothing is rounded between months.

Assumptions

  • The index return is the same every year; real returns go up and down, and past returns do not predict future ones.
  • Additions are made at the end of each month.
  • Taxes, trading costs and tracking error are not included. This is an estimate, not investment advice.

Worked examples by hand

The SEC’s example. $100,000 at 4% a year for 20 years, no additions. With a 0.25% expense ratio each year multiplies the value by 1.04 × (1 − 0.0025 ÷ 12)^12 = 1.0374030, so the value is 100,000 × 1.0374030^20 = $208,424.99. With 1% the factor is 1.0296475 and the value $179,379.03. The lower fee keeps $29,045.96 more; the SEC rounds the two values to about $208,000 and $179,000.

$500 a month, no expenses. $500 a month for 30 years at 7%. Monthly rate i = 1.07^(1/12) − 1 = 0.5654145%. Value = 500 × ((1 + i)^360 − 1) ÷ i = $584,726.30, from $180,000 put in.

$10,000 plus $500 a month, 0.05% against 1%. 30 years at 7%. Month by month, the index fund reaches $653,984.17 and the 1% fund $537,957.29; the index fund’s expenses add up to $3,464.21.

Other questions people ask

How much will my index fund grow?

It depends on the return, which no one knows in advance. At a steady 7% a year, $500 a month for 30 years grows to $584,726 before fees, from $180,000 put in. With a 0.05% expense ratio and $10,000 to start, it reaches $653,984. Try several returns to see a range; the calculator never looks up past index returns.

Why do index funds cost less?

An index fund buys the securities in an index, such as the S&P 500, instead of paying managers to pick them, so its expense ratio is usually low (often 0.03% to 0.20% a year). Actively managed funds often charge 0.5% to 1% or more. The difference compounds: in the SEC’s example, $100,000 at 4% for 20 years ends near $208,000 with a 0.25% fee and near $179,000 with 1%.

What does the comparison fund show?

The same money, added on the same days, at the same return, but with the comparison expense ratio (1% by default). “Kept by the lower fee” is how much more the index fund is worth at the end. Leave the comparison empty to hide it.

Is the return before or after the expense ratio?

Before. Type the return of the index itself; the calculator takes the expense ratio out month by month, as a fund does. An index return of 7% with a 0.05% expense ratio gives about 6.95% a year to you.

What return should I use for an S&P 500 index fund?

The page does not suggest one. Long-run returns of U.S. stock indexes have varied a lot by period, and future returns may be lower or higher. A cautious plan tries a low, a middle and a high return.

Does it include taxes or dividends?

The return you type should include reinvested dividends (a total return). Taxes on dividends and gains, trading costs and the small gap between a fund and its index (tracking error) are not included.