You enter an initial lump sum, a recurring monthly contribution, an expected annual return rate, and a time horizon in years. The tool applies the future value of an annuity formula with monthly compounding to project the ending balance. It assumes a constant rate of return and does not account for taxes, fees, inflation, or market volatility.
A common starting point is 7% for a diversified stock portfolio (roughly the historical average after inflation) or 10% before inflation. For a more conservative mix with bonds, 4-6% is typical. Use a lower rate if you want a margin of safety in your projections.
No. Returns in a taxable brokerage account are reduced by capital gains and dividend taxes each year. In tax-advantaged accounts like a Roth IRA or 401(k), the growth is tax-deferred or tax-free. Adjust your expected return downward for taxable accounts.
Compound interest is exponential — even a 1% difference compounds dramatically over decades. For example, $500/month at 7% for 30 years grows to about $567,000, while the same at 8% reaches roughly $680,000 — a $113,000 gap from a single percentage point.
No. The calculator assumes a constant annual return, which never happens in real markets. Actual returns fluctuate year to year, and the sequence of returns (especially near withdrawal) materially affects outcomes. Treat this as a planning estimate, not a guarantee.
Historically, lump-sum investing outperforms dollar-cost averaging about two-thirds of the time because markets tend to rise. However, spreading investments over time reduces the risk of investing everything at a market peak. Both approaches are reasonable depending on your risk tolerance.
Estimate only. Results reflect your inputs and standard formulas — they are not financial, tax, legal, health, or investment advice. Verify important decisions with a qualified professional.