If I invest into a mutual fund for three years at $100 per month, about how much would be my return?

Answer 1

It depends on the expected return of the fund you want to buy. Lets say it is a S&P 500 index fund. Its historical total return (i.e. with distributions reinvested) has been around 11,8% per year, as can be seen here:

http://etf-investing.indicart.com.ar/research/SP500_historical_real_returns.shtml

Substract the fund's expenses, about 0,3% for example if it is a low cost no-load index fund. That would make 11,5%. Your periods are months, so to convert that to months we have to take the 12th root of (1+0,115) minus 1, which is 0,91%.

Now use this formula:

value at end = monthly contributions * ((1+return)^(periods+1)-1) / return

That would be:

value at end = 100 * ((1+0,0091)^(36+1)-1) / 0,0091 = 4376

That's the amount of dollars we may expect your investment to cost at the end of the three years. The only problem is that, usually, there are minimum initial purchases for these kinds of funds, for example of 3000 dollars, so you would need to invest that kind of money to start. You wouldn't if you bought ETFs instead of mutual funds, but don't add money every month in that case, because transaction costs would take away your profits and more.

Also remember there are taxes to pay on your gains (unless your investment is in a tax-sheltered account).

Hope it helps.

Answer 2

There are tons of investment calculators out there to forecast how much you would have later. But truthfully, three years is not a long time to let your money grow.

http://www.ici.org/cgi-bin/calcs/SAV14.cgi/investment_company_institute

Put in the monthly amount and you'll need to guess the rate of return. Pick the 10 year average for the mutual funds you are looking at to plug into the formula.

Also, morningstar.com lists many funds by type and list who much a 10K investment would be worth later to give you an idea of returns.

Answer 3

it depends what kind of mutual fund you want and of course on the rate of interest.
heres an example for you... if you where to invest in a mutual fund with an initial starting amount of $1000 at 10% of interest with a $100 monthly contribution... in 3 years you would have a total of 5,700.20... not bad at all

Answer 4

Mutual funds may fluctuate in price, unless there is a guaranteed return, like with a bond.

Answer 5

With a total of $3600 of monthly contributions, and 10%, you would have $4210.31. This gives you a return of $610.31 over your monthly contributions.

Answer 6

Depends on how much the individual financial institution is willing to match.