 Personal finance practice problem using Excel. Mutual fund, contingent deferred sales load. Prepare to get financially fit by practicing personal finance. Here we are in our Excel worksheet if you don't have access to it, that's okay because we'll basically build this from a blank sheet. But if you do have access, three tabs down below. Example, practice blank, example, answer key, let's look at it now. Information on the left, calculations on the right. We're imagining we're investing in a mutual fund thinking about the fees that might be related to it. Doing the calculation for a contingent deferred sales load which we'll talk about a bit more in a second. The second tab, a practice tab, having some pre-formatted sales on the right so you can work through the practice problem with less Excel formatting. The third tab is where we're gonna do some Excel formatting in the blank tab. If you don't have any of this, so that's okay because you can open up a fresh Excel worksheet with a blank sheet. You can lay down your baseline formatting, add the data on the left hand side. If that's what you're doing, the baseline formatting I would lay down would go something like this. I would select the entire sheet, possibly with the triangle up top, right click the selected area, format the sales within it and then I usually start off with currency, negative numbers being bracketed and red, no dollar sign, no decimals. That's the starting point for me. Typically I'm not gonna hit okay because I already have this. I'm just gonna X out of it and then add your data on the left hand side, expanding the sales as needed and changing the format of the sales as needed as with the percent. Going to the number tab, adding a percent, adding a decimal. Make a skinny C column and then we're good to go. So we're imagining we're investing in a mutual fund again so that's a little bit different than investing in individual stocks. The mutual fund pooling the investments together, having a fund manager allocate the investments over the securities that are within the mutual fund in accordance with the rules of the mutual fund. Now we wanna be able to think about the fees related to that. We might have fees and you can think of them as basically three categories of fees. You got the front end load which might be like a commission that would be involved. You got the fees that might be like an annual type of fee that would be involved for the maintenance of the fund. That would be the fund manager generally being paid for primarily in just processing the functioning of the fund, the allocation of the fund and so on. That could vary with whether the fund is actively managed or whether the fund is passively managed like with an index and there could be funds on the tail end which could be for, those could be like temporary for example as well, meaning you get charged when you're exiting or selling out of the fund and those are the ones that we're gonna be concentrating on in here. So if we're investing in a mutual fund for example, we're gonna imagine we're putting $55,000 into a mutual fund. We're imagining there's no front end load which is basically the commission, the front end load, the charge you might get when you put the money in might be there if you're dealing with like a broker but if you buy the mutual fund directly then you might not have a front end load which could be good. You wanna be aware of that and then we've got this contingent deferred sales load for withdrawing during the first year. So in other words, you might have a situation where basically if you put the money in and you take it out in a short period of time, they charge you a fee because you took it out within a short period of time. So you wanna be aware of that when you're putting the money in, am I gonna need the money in a short period of time or am I pretty confident that I can leave it in there through that time horizon before I take the money out and then of course we can consider the fee that would be related to us pulling the money out early which of course now isn't on the front end. It's basically on the back end when we're selling the stock at that point or selling the mutual fund. And withdrawals for the first year we're gonna imagine that we're taking out within the first year $8,800 of the $55,000 that we put in and therefore of course we're gonna be charged with the fee. The other fee we might have is just simply the maintenance fee and that might be an annual fee that might be dependent upon the investment that we have and we'll talk more about that later. So let's go ahead and just calculate this if we're gonna take that $8,800 out before we clear the date where we might not be charged for it. If we pull it out early, we're gonna have the fee fairly straightforward calculation at that point once we understand what the fee is. So the contingent, we're gonna call it the contingent deferred sales load. Now of course it's contingent in this case because it's contingent upon us pulling the money out before a certain deadline and therefore we're hitting the fee as opposed to if we went past the deadline possibly then we would not be subject to the fee that's the contingent component. It's deferred because it's not upfront. It's happening when we're pulling the money out and so the sales load of the fee. So let's go ahead and make this black and white. I'm gonna go up top, home tab, font group, bucket drop down, making that black and then white on the lettering and we're just gonna say the amount that we drew out, not the investment of course. That's how much we put in. That's not what's totally in the whole fund in and of itself. That's our portion of the investment that we put into the mutual fund. We took out the draws of 8,800. Draws with draws for the first year. We'll keep it there. This equals the 8,800 that we took out early and therefore we're subject to the fees. So we got the fee percent, I will just call it and that's equal to the 4.5%. Let's make that a percent up top, going from the home tab, number group, percentificate unit and then making a decimal on it here. We're gonna do an underline, font group and underline with the underline and that's gonna be then the contingent. We'll just call it contingent, deferred sales load. I gotta make this cell D a little bit larger. I'm just gonna double click between D and E. Double click, boom, it does it for us. We're in E4. E4 is gonna be equal to 8,800. E2 times the 4.5% in E3. Enter about 396. Let's go ahead and make a decimal to see if there's any pennies involved here. I wanna know how many pennies down to the penny. No pennies, at least there. So there we go. Let's make this blue and bordered as is has been our custom. We're gonna select these up to the home tab, font group, bucket drop down. I usually use that blue. If you don't have it, you can go to the more colors or you can use another color. I'm in the standard wheel. I'm gonna pick that blue right there. That's the one, that's the one. You're the one, Wyatt. I'm gonna go up top, home tab, font group. That's from Tombstone. I don't know Wyatt. I have a Tombstone quote on it, but you're the one, Wyatt. That's when his brother's dying. Any case. We'll hit the drop down, put some borders around it, and there we go. So what we wanna have an understanding of are the types of fees that might be involved. We wanna think about is there an upfront fee? Is there a commission fee? Can I avoid the upfront fee? If possible, is there a fee if I pull the money out early? How painful might that fee be? Can I avoid that fee by putting money in that I can keep it in there beyond that fee? And then of course what's basically the management fees which might be like the annual fees for the standard maintenance of the mutual fund.