This Index Fund Calculator helps investors project the long-term growth of passive investment portfolios, such as those tracking the S&P 500 or the Total Stock Market. Unlike active trading, index fund investing relies on the power of compounding and low costs. This tool accounts for your starting capital, recurring monthly contributions, and importantly, the impact of the expense ratio (the fee charged by the fund provider).
The Impact of Expense Ratios
One of the most critical factors in index fund selection is the expense ratio. While a 0.5% fee might seem small, over 30 years it can strip away tens of thousands of dollars from your final portfolio. Most broad-market index funds from providers like Vanguard, Fidelity, or Schwab offer ratios below 0.10%. Our calculator subtracts this fee from your expected annual return to show you the "net" growth of your wealth.
Example Growth Scenario
Consider an investor starting with $5,000 and contributing $400 per month into a low-cost S&P 500 index fund. If the market returns an average of 10% annually (the historical average) and the fund has an expense ratio of 0.03%, after 30 years, the portfolio would grow to approximately $815,000. Of that total, only $149,000 was direct contributions; the rest is the power of compound returns.
Why Choose Index Funds?
Broad Diversification: A single fund can give you exposure to hundreds or thousands of companies.
Low Costs: Because they are managed by algorithms rather than high-paid stock pickers, fees are kept to a minimum.
Consistent Returns: Historically, index funds outperform the majority of actively managed funds over long time horizons.
Tax Efficiency: Lower turnover within the fund results in fewer capital gains distributions.
function calculateIndexFund() {
var initial = parseFloat(document.getElementById('initialBalance').value);
var monthly = parseFloat(document.getElementById('monthlyDeposit').value);
var annualRate = parseFloat(document.getElementById('annualReturn').value) / 100;
var years = parseFloat(document.getElementById('years').value);
var expense = parseFloat(document.getElementById('expenseRatio').value) / 100;
if (isNaN(initial) || isNaN(monthly) || isNaN(annualRate) || isNaN(years) || isNaN(expense)) {
alert("Please enter valid numerical values.");
return;
}
// Net rate after fees
var netAnnualRate = annualRate – expense;
var monthlyRate = netAnnualRate / 12;
var totalMonths = years * 12;
// Compound Interest Formula for Initial Balance: A = P(1+r)^n
var futureValueInitial = initial * Math.pow((1 + monthlyRate), totalMonths);
// Future Value of a Series (Annuity): FV = PMT * [((1 + r)^n – 1) / r]
var futureValueSeries = 0;
if (monthlyRate > 0) {
futureValueSeries = monthly * ((Math.pow((1 + monthlyRate), totalMonths) – 1) / monthlyRate);
} else {
futureValueSeries = monthly * totalMonths;
}
var finalBalance = futureValueInitial + futureValueSeries;
var totalInvested = initial + (monthly * totalMonths);
// Calculate what it would have been WITHOUT fees to show fee impact
var monthlyRateNoFees = annualRate / 12;
var fvInitialNoFees = initial * Math.pow((1 + monthlyRateNoFees), totalMonths);
var fvSeriesNoFees = monthlyRateNoFees > 0 ? monthly * ((Math.pow((1 + monthlyRateNoFees), totalMonths) – 1) / monthlyRateNoFees) : monthly * totalMonths;
var balanceNoFees = fvInitialNoFees + fvSeriesNoFees;
var totalFees = balanceNoFees – finalBalance;
var totalGains = finalBalance – totalInvested;
// Update Display
document.getElementById('resTotalInvested').innerText = "$" + totalInvested.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resTotalFees').innerText = "$" + totalFees.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resTotalGains').innerText = "$" + totalGains.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('resFinalBalance').innerText = "$" + finalBalance.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById('results').style.display = 'block';
}