Investment Calculator
Compound growth means returns earn further returns. With monthly compounding, $10,000 plus $400 a month at a 7% annual return grows to about $381,283 after 25 years. You contribute $130,000 of that; the remaining $251,283 is growth. Small changes to time or rate make large differences to the result.
Monthly compounding. Returns are an assumption, not a forecast.
How to use the Investment Calculator
- Enter your starting amount.
- Enter how much you will add each month.
- Enter an expected annual return and the number of years.
- Read the future value, your total contributions and the growth, and check the year-by-year curve.
Formula
Each month: balance = balance × (1 + annual rate ÷ 12) + monthly contributionGrowth compounds monthly and contributions are added at the end of each month. The result is in today's currency before tax, fees and inflation, so treat the return you enter as an assumption, not a forecast.
What drives the result
- Time: the longer money compounds, the larger the share that comes from growth.
- Return: 5% and 8% a year produce very different outcomes over decades.
- Contributions: regular monthly amounts often matter more than the starting sum.
- Fees: a 1% yearly fee can reduce a long-term balance by a quarter or more.
Inflation
At 3% inflation, $100 today buys about $74 of goods in 10 years. To see results in today's money, enter a real return: your expected return minus expected inflation, for example 7% - 3% = 4%.
Investment Calculator questions
What annual return should I use?
For long-term planning, many people use 5% to 7% a year for a diversified stock-heavy portfolio, and 3% to 5% for balanced or bond-heavy mixes. Broad US stocks have averaged roughly 10% a year before inflation over long periods, but returns vary widely and are never guaranteed.
How does compound interest work?
Compound interest pays returns on both your contributions and past returns. At 7%, $10,000 grows to about $10,700 after one year, and the next year's growth is calculated on $10,700. Over decades, growth on growth becomes the largest part of the balance.
How much should I invest each month?
A common target is 10% to 15% of income for long-term goals such as retirement. On a $60,000 salary that is $500 to $750 a month. Start with what you can afford and raise contributions with each pay rise; even $300 a month at 7% grows to about $366,000 in 30 years.
Is it better to invest a lump sum or monthly?
Historically, investing a lump sum straight away has beaten spreading it out about two thirds of the time, because markets tend to rise. Investing monthly (dollar-cost averaging) reduces the regret of buying just before a fall. Both work far better than waiting on the sidelines.
How does compounding frequency affect returns?
More frequent compounding adds a little: 7% compounded monthly is equivalent to about 7.23% compounded once a year. The difference is small compared with the effect of your return rate, contributions and time invested. This calculator compounds monthly.
Should I account for inflation?
Yes, for long horizons. Inflation reduces what money buys, so a large nominal balance may be worth much less in today's terms. Enter a real return (expected return minus inflation) to see the result in today's money, or compare the nominal result with expected prices.
How do fees affect my investment returns?
Fees compound against you. A 1% annual fee on a growing portfolio can reduce the final balance by 20% or more over 30 years. Low-cost index funds often charge under 0.2% a year. Subtract fees from your expected return when using the calculator.
How do taxes affect investment growth?
Taxes on dividends and gains slow compounding in ordinary accounts. Tax-advantaged accounts such as a 401(k), IRA or ISA let money grow tax-deferred or tax-free. In many countries, gains on assets held longer than a year are taxed at lower rates than short-term gains.