How Quickly Will a Mutual Fund Multiply?

Growth funds invest primarily in stocks. Over a long-term holding period, stocks tend to outperform all other asset classes, including bonds and money market funds, with a long-term average return approaching 10 percent annually. At that rate, a stock fund would double in a little over seven years. However, stock funds are typically more volatile than other types of mutual funds as well. Over a one-year holding period between 1950 and 2010, average stock returns have varied from a high of 53.4 percent and a low of minus 44.8 percent, according to USA Today (see Resources).

Bond funds tend to be more stable than stock funds, but over the long run multiply your money more slowly than stock funds. For example, the worst recent year for intermediate bonds was a loss of just 1.8 percent, in 1994, according to CNN. However, the average return for long-term U.S. Treasury bonds, which are among the safest investments available, is just over 5 percent. At that rate, it will take almost 14 years for your mutual fund investment to double (see Resources).

A money market fund is generally a place to safely park your money, rather than a good option for multiplying your money. Money market funds invest in safe, short-term securities that typically offer a low rate of return. If a bond fund returns about 5 percent, a money market fund might pay only 1 to 3 percent on average. At those rates, your money could take decades to multiply (see Resources).

International funds invest primarily in stocks, bonds and money market securities from overseas companies. In addition to possibly investing in securities from countries with less stable governments, international funds bring an additional layer of volatility from foreign currency exposure. As a result, the returns on international funds of all types can be less predictable than funds investing in U.S. securities. However, returns on the riskiest type of international funds, so-called "emerging market" funds, can be dramatic. For example, the National Bureau of Economic Research reported an average annual return for Latin American funds of 31.01 percent from 1976 to 2005. If you invested in a mutual fund with those types of annual returns your fund would double in just over two years. However, losses can be equally as spectacular.