Mutual fund fees may mean the difference between earning a substantial amount from a fund or not. A fund may charge fees when you initially invest, a fee when it's time to redeem your shares and a fee to manage and maintain the fund each year. The United States Securities and Exchange Commission (SEC) requires that a fund's fees be listed in its prospectus. Calculate the cost of a mutual fund before you invest in it.

1. Choose an amount to invest in the mutual fund. For example, pretend you are going to invest $5,000 in the fund. Record this amount in the first column, first row of your spreadsheet.

2. Read the prospectus to find out the sales load, or amount charged on your investment. The sales load can be either front end, meaning you pay up front, or back end, meaning you pay when you redeem the stocks. Record the sale load percentage in column 1, row 2 of your spreadsheet.

3. Type "=product(A1:A2)" in column 1, row 3 of the spreadsheet to calculate the sales load on the fund. If the initial investment is $5,000 and the front end sales load is 2 percent, you'd have to pay $100 from the initial $5,000, so you are actually investing $4,900.

4. Calculate the cost of the annual fund fee. Add 1 to the expected rate of return and then multiply that by 1 minus the annual fee percentage, then subtract 1. For example, if you anticipate a 5 percent return and are charged a .5 percent fee, your actual return is 4.4 percent. Record this amount in column 1, row 4. Record the annual fee amount in column 1, row 5 on the spreadsheet.

5. Find out how much your investment will earn over a period of years if you did not have to pay any fees. In column 2, row 1 of the spreadsheet, record the amount of the investment. In column 2, row 2 type "=power(1+rate of return, length of investment)." Using the example, you would type ="power(1.05, 5) for a five year investment with a 5 percent rate of return. Type "=product(B1:B2)" in column 2, row 3, to calculate the amount you'd earn without any fees.

6. Calculate how much the investment earns with the fees. In column 3, row 1, record the amount of the investment after the front-end sales load is deducted. Type "=power(1+amount in column 1, row 4, length of investment)" in column 3, row 2. Using the example, you would type "=power(1.044, 5). In column 3, row 3, type "=product(C1:C2)" to determine the amount you'd earn after fees.

7. Subtract the amount in column 3, row 3 from the amount in column 2, row 3 to find out how much your mutual fund fees will cost.

### Items you will need

- Prospectus for mutual fund
- Spreadsheet software