ETF Calculator

ETF Calculator to calculate yearly returns for your ETF investments. The ETF return calculator has options to include yearly contributions and expense ratio for your ETF.

What is an index fund?

Exchange-Traded Fund or ETF is a type of investment that is similar to a mutual fund except that they are traded just like stocks and can be bought and sold on regular stock exchanges. ETFs hold a collection of assets such as stocks, bonds, golds, or other commodities.

For example, SPY and QQQ are two of the most popular ETFs trading on the market. SPY tracks the Standard & Poor's 500 (S&P 500) index, whereas QQQ tracks the 100 largest companies listed on the Nasdaq stock exchange. SPY currently has a market cap of over 300 billion and QQQ has over 100 billion.

Why invest in ETFs?

One reason to invest in ETFs is that ETFs offer better return rates than many of the other investments such as bonds. At the same time, many ETFs pay a nice dividend, which offers a perfect passive income stream for many people.

By investing in ETFs instead of an individual stock, you also reduce market risks. At any given time, a stock could go bankrupt. Even a bluechip stock could get in trouble during a financial crisis, and many never recover their previous peak in decades.

SPY and QQQ on the other hand are safer because they are not buying one stock, they are a collection of stocks. The chance of all these stocks going bankrupt is close to zero. They have ups and downs just like stocks, and they will not do well in a financial crisis, but they always come back out of a depression when given enough time.

Just like the real estate market in the US, there is only one direction that they will go, and it is up. There might be short-term fluctuations and market corrections, but SPY and QQQ always come back in ten or twenty years because they are highly correlated to the US economy. When the US economy is doing well, SPY and QQQ will do well.

Just like any other investments, there are risks involved in ETF investing. There are many types of ETFs, some holding assets of financial companies like FAS and others holding energy stocks XLE. These ETFs focus their portfolio on a sector and are not diversified across different industries, and they are much riskier than SPY.

How to calculate ETF return?

With our ETF return calculator, you can get a rough estimate of how much you can expect your money to grow by investing in SPY or any other type of ETF. Simply enter the initial investment, expected growth rate, the number of years, and the management fees that the ETF charges per year, you will get a breakdown of how much you have after a certain year. You also have the option to make additional contributions each year.