I’m a big fan of using calculators to help clients determine the “real-world” math supporting the use of various wealth-building tools.
One of my favorite software tools is the OnPointe Investment Risk Analyzer program. The software helps consumers determine their own individual investment risk tolerance and then can be used to score investments and portfolios.
OnPointe can also be used to put together the right mix of wealth-building tools to make sure the risk score of the tools used by the consumer is similar to their personal risk score.
Do you know your personal investment risk score? If not, go to the Aspen Creek Financial website where you can use the OnPointe program to determine your personal risk score.
Determining how much it really costs to invest in specific mutual funds
People blindly pour significant amounts of their investable dollars into mutual funds every year. Unfortunately, most have NO IDEA how much it will cost for the privilege of investing in various funds.
Now even consumers (non-advisors) can find out how much it costs to invest in mutual funds by using a very simple online calculator. To use an online calculator to determine how expensive a particular mutual fund is, click on the following link: https://tools.finra.org/fund_analyzer
The online calculator will blow your mind. It literally lets you pick from over 18,000 mutual funds and determines the actual fees that would have been paid when investing in the funds over the last 5, 10, 15+ years.
Let’s look at an example of this powerful calculator
Assume an investor (45-year old male) invested $100,000 in the Allianz AGIC Emerging Markets Opportunities Fund Class C [AOTCX] 20 years ago, and it earned 8.0% each year.
- Value after 20 years: $311,195
- Gain: $211,195
- Total Fees: $75,159
That’s really pricey. The net return is only 5.84%.
Not all funds are so egregious. Let’s look at the much leaner American Fund [AGTHX] using the same $100,000 investment and gross rate of return.
- Value after 20 years: $395,747
- Gain: $295,747
- Total Fees: $30,642
This is much better than the international fund, and the net return is 7.12%
What’s the point of using the mutual fund calculator?
Well, if you are invested in mutual funds (on your own or because an advisor told you to invest in them), at least you now have a resource to determine the costs of using those funds.
As always, if you have questions about your current retirement plan or would like help mapping out a retirement plan to accomplish your goals, send us a message or schedule an appointment so we can help answer your questions.