Markaz Fund Calculator

Plain-language meaning of every word used in this calculator.

15 of 15 terms

• Effective annual net returnHow much your money grows in a year, after the fund's own running costs.MoreLess

  The yearly growth rate used in every projection here. It is an annual, compounding rate applied after the fund's ongoing management and operating costs, but before the subscription fee you pay on each payment. Scenario rates come from the fund's published historical results; a custom rate is your own assumption.

• Subscription feeA one-off charge taken from each payment before it is invested.MoreLess

  A percentage deducted from every contribution at the moment you make it. If you pay KD 250 with a 2% subscription fee, KD 5 is the fee and KD 245 is invested. It is charged per payment, not per year, so it does not compound — but it permanently reduces the amount that can grow.

• Periodic returnThe yearly growth rate broken into the size of one payment period.MoreLess

  The rate applied to each payment interval. It is derived from the annual rate by compounding, not by dividing: periodic return = (1 + annual return) ^ (1 / payments per year) − 1. For 7.70% a year paid monthly, each month grows by about 0.62%, which compounds back to exactly 7.70% over twelve months.

• ContributionThe amount you add each time you pay in.MoreLess

  The gross amount you pay on each date, before the subscription fee is deducted. This calculator treats every contribution as arriving at the end of the period, so the payment you make at the end of a month starts growing from the following period.

• Payment frequencyHow often you pay in — for example monthly or once a year.MoreLess

  The number of contributions per year. Frequency changes both the number of payments and the periodic return used for each one. Paying the same amount more often means more total money paid in, and more subscription fee paid in total.

• Projected ending valueWhat your total pot could be worth at the end, in this estimate.MoreLess

  The future value of all net contributions compounded at the periodic return: net contribution × (((1 + periodic return) ^ number of payments − 1) / periodic return). It is an arithmetic projection of a constant rate, not a forecast — real returns vary year to year and can be negative.

• Estimated growthThe part of your final total that is not money you paid in.MoreLess

  Projected ending value minus everything you paid in, including the fees. It can be negative over short periods or at low return rates, which means the projection ends below the cash you contributed.

• Total feesAll the subscription fees added together over the whole period.MoreLess

  Total contributions × subscription fee rate. Because each fee is taken before that money can grow, the true cost is larger than this figure — the results screen shows how much lower the final estimate becomes once fees are applied.

• CompoundingGrowth earning growth on top of itself, period after period.MoreLess

  Each period's growth is added to the balance, so the next period grows on a bigger base. This is why a small change in the annual rate produces a large change in the ending value over long periods — the sensitivity table on the results screen shows that effect.

• Return scenarioA ready-made growth rate to use if you do not want to pick your own.MoreLess

  Careful, balanced and strong scenarios are drawn from the funds' published historical performance. They illustrate a range of outcomes and are not predictions, guarantees or recommendations.

• NAV (net asset value)The value of one unit of the fund.MoreLess

  The per-unit value used to convert money into fund units. Minimum subscription requirements are expressed in units, so the cash minimum moves with the latest published NAV.

• Growth ratingA simple label for the growth rate you chose.MoreLess

  Based only on the assumed annual return: below 5% is rated poor, 5% to 8% fair, and above 8% excellent. It rates the modelled return rate alone — it says nothing about risk, liquidity or whether a fund suits you.

• Inflation and today's moneyPrices usually rise, so future money buys less than the same amount today.MoreLess

  A nominal amount is the number of dinars you would actually hold in the future. Today's purchasing power converts that future amount into what it would buy at today's prices, using value today = future amount / (1 + inflation)^years. The rate used here is an editable illustration, not an official forecast.

• Inflation factorHow much more things are expected to cost by the end of your period.MoreLess

  The factor is (1 + inflation rate) ^ years, using the yearly inflation rate you set and the whole length of your plan. At 2.5% a year over 20 years the factor is 1.025^20 ≈ 1.6386, meaning prices are assumed to be about 64% higher. Everything shown as 'today's value' is divided by this factor, and a target you set in today's money is multiplied by it.

• Today's valueWhat a future amount could buy at today's prices.MoreLess

  Today's value = future amount ÷ inflation factor, where the inflation factor is (1 + inflation rate) ^ years. It converts the projected future dinars into money you can compare with prices you know now. The nominal figure beside it is the actual number of dinars you would hold; only the buying power differs.