Investment Calculator
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What Your Result Means
- Future Value: The projected total balance at the end of your time horizon, including both your contributions and accumulated interest.
- Total Contributed: The sum of your initial investment plus all monthly contributions over the period — this is the money you actually put in.
- Interest Earned: The difference between future value and total contributed — this is what compounding generated for you. A healthy ratio of interest to contributions generally indicates a long time horizon or strong returns.
- Benchmark: Historical U.S. stock market returns have averaged roughly 7-10% annually before inflation. Conservative bond portfolios typically return 3-5%. Your actual results will vary with asset allocation and market conditions.
How This Calculator Works
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.
Quick Questions
What return rate should I use?
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.
Does this account for taxes?
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.
Why does a small rate difference matter so much?
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.
Is the result guaranteed?
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.
Should I invest a lump sum or dollar-cost average?
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.
Sources
- SEC — Guide to Savings and Investing (compound interest fundamentals, investor education)
- Investor.gov — Compound Interest Calculator (government reference calculator for comparison)
- Bureau of Labor Statistics — CPI Inflation Calculator (adjusting nominal returns for inflation context)
Method & review
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.