blog . invest  .

3 minutes reading time (576 words)

A Simple Kick-Ass Tool to Quickly Assess your Mutual Fund Expenses and Fees.

As an investor, you cannot afford to pay too much in fees and expenses. Legendary investor Warren Buffett has two simple money rules: "Rule No. 1: Never lose money. Rule No. 2: Never forget rule No. 1." By paying a lot in fees, you are in fact losing money, causing you to violate Warren Buffett's #1 money rule. What if you could estimate your mutual fund fees and expenses before investing? Here's a tool to help you do just that. 

Introducing Fund Analyzer

Fund Analyzer is a simple mutual fund tool from the Financial Industry Regulatory Authority (FINRA). This tool helps you estimate how fees and expenses will impact your investments. To show you how useful and easy this tool is, let's use the Fidelity® 500 Index Fund (FXAIX) to estimate 10 year expenses on a $50,000 initial investment. As of 7/28/19, the expense ratio of FXAIX is 0.015%. That's $1.50 annually for every $10,000 invested in the fund!

Step 1: Access Fund Analyzer

Using your web browser, visit: "https://tools.finra.org/fund_analyzer". You should be greeted by the screen below.

Figure 1. How to access Fund Analyzer. Courtesy of FINRA Fund Analyzer.

Step 2: Type in the fund name or symbol

In the search box, type in either the fund name or symbol. In our case, either "Fidelity 500 Index Fund" or "FXAIX" will do the job. Then click the red "Analyze" button (Figure 2 below).

Figure 2. Type in your fund name or symbol

Step 3: Enter your initial contribution, rate of return and holding period

Next, type in your initial contribution, rate of return and holding period. For the purpose of this article, our initial contribution, rate of return and holding period are $50,000, 8% and 10 years, respectively. The 10-year average S&P 500 return is 10%-13%. This step is shown below in Figure 3.

Figure 3. Specify an initial amount, rate of return and holding period.

Step 4: Behold your estimated fund fees and expense!

Based on a 8% rate of return, an investor can expect to pay approximately $112.84 in fees by investing $50,000 in the Fidelity® 500 Index Fund over 10 years! The estimated future value of this initial investment, after fees and expenses, is a whopping $107,784.47 (Figure 4 below). No wonder legendary investor Warren Buffet recommends index funds for the average investor.

Figure 4. Fund cost. With an initial investment of $50,000 in FXAIX, an investor is expected to pay $112.84 in fees over 10 years.

The bottom line

Fund Analyzer is a simple and powerful tool that allows an investor to estimate his/her fund cost. When evaluating and selecting mutual funds, always take a close look at the expense ratio and other investment fees. You can also use this tool to compare and estimate expenses on 2 or 3 funds side by side.

4 Major Asset Classes that Every New Investor Shou...
A Simple Index Fund & ETF Quiz: Only a Few People ...

Related Posts

 

Comments

No comments made yet. Be the first to submit a comment
Already Registered? Login Here
Guest
Saturday, 08 May 2021

Captcha Image

By accepting you will be accessing a service provided by a third-party external to https://newvestor.com/

Stock Screening Tool

Stock screening and investing made easy with Stock Rover. Discover your favorite stocks! Why Stock Rover? Disclaimer.

SPONSORED CONTENT

BECOME A FAN. SUBSCRIBE

Investing is for Everyone.

Investing is one of the best ways to build wealth quickly. Let's get you started below.

Investing can be intimidating when you're just getting started. Let's simplify it for you. Let's start with the building blocks.

Read our latest blog articles about investing, financial freedom and debt management. Give us your feedback.
Got $5, $50, $100, $1,000 or more? Investing your way up to financial independence is achievable.  Ready to get there?

#Featured Stories

#Sponsored Content

#Most popular

How to invest in real estate without buying properties.

Can you invest in real estate without buying physical properties? Yes, indeed! Here's your guide...

Poor? How to invest $50. Here's what we recommend.

Got $50 collecting dust? Get on the path to financial independence. Here's what to buy...

Cash is trash, not king. Invest your cash to build wealth.

Got cash sitting around? Being robbed by banks? Your money is losing value. Invest it to build...

#Product Reviews

Stock Rover: stock screener!

From stock screening and research to full portfolio analysis, we haven't found a more robust screening tool.
Read more

SoFi: Simple investing platform

Investing has never been so easier with SoFi. With a simple app, start investing in stocks, ETFs & Crypto.

Read More

Stock Rover: Stock Screener.

From stock screening and research to full portfolio analysis, we haven't found a more robust screening tool.

Read More

#Let's Invest!

Disclaimer: We may receive a commission for products or services you sign up for. Thanks! Full disclaimer.

#Get in touch.

Please fill out the form below. We will get in touch soon.

#Become a fan.

Subscribe for our latest updates, blog posts and investing tips. No spamming!