How to use the Investment Calculator
- Enter the amount you are starting with. It can be zero.
- Enter the amount you will invest every month.
- Enter the yearly return you expect. Use a cautious figure.
- Enter the number of years and read the future value, the total you put in and the growth.
Formula used
Each month: balance = balance × (1 + r) + contribution, where r is the yearly return divided by 12. The result is in future money, before tax, fees and inflation.
Worked example
Here is the Investment Calculator worked through with the example values shown above, so you can check each step by hand.
| Inputs | |
|---|---|
| Starting amount | $5,000 |
| Monthly contribution | $300 |
| Expected return (per year) | 7 % |
| Time | 20 years |
| Result | |
| Future value | $176,472 |
| Total you put in | $77,000 |
| Investment growth | $99,472 |
Future value at different returns
The default plan with only the yearly return changed.
| Expected return (per year) | Future value | Investment growth |
|---|---|---|
| 3 % | $107,594 | $30,594 |
| 5 % | $136,873 | $59,873 |
| 7 % | $176,472 | $99,472 |
| 9 % | $230,412 | $153,412 |
| 11 % | $304,366 | $227,366 |
How the future value is worked out
Each month the balance grows by the monthly return (the yearly rate ÷ 12) and then your contribution is added. Starting with $5,000 and adding $300 a month at 7% for 20 years, the balance reaches $176,472. You put in $77,000 yourself, so $99,472 is growth.
More than half of the end value comes from growth. The longer the period, the larger the share of growth, which is the effect of compounding.
The effect of the return
Return has a large effect over long periods. With the same plan, 3% a year gives $107,594, 5% gives $136,873, 7% gives $176,472, 9% gives $230,412 and 11% gives $304,366.
Actual investment returns are not constant. They vary from year to year and can be negative. Use a conservative assumption for planning and check the result with a lower rate.
Time and monthly amount
Time matters more than most people expect. The same $300 a month for 10 years gives $61,974, for 20 years $176,472 and for 30 years $406,574. Doubling the monthly amount to $600 gives $332,750 over 20 years.
Starting early with a smaller amount often beats starting late with a larger one. Raising your contribution when your income grows helps too.
What the result leaves out
The calculator does not subtract taxes, fund fees or inflation. Fees reduce your return every year, so check the cost of any fund you use. Inflation reduces what the future money can buy; use the inflation calculator on this site to convert the result into today’s money.
The figures are projections, not promises, and investing carries the risk of loss. This is general information, not financial advice.
Fees and small differences in return
A difference of one percentage point in yearly return adds up over time. With the default plan, 7% grows to $176,472 after 20 years and 6% grows to $155,163, a gap of $21,308. A fund that charges 1% a year in fees therefore costs you a sizeable share of the final amount, even though 1% sounds small.
When you compare funds, look at the total cost, called the expense ratio, and use the return after fees in the calculator. Low-cost index funds are popular partly for this reason. Keep in mind that past returns are not a guide to future returns, and that the figures here are a projection, not a promise.
Frequently asked questions
What return should I assume?
Nobody knows future returns. Use a cautious figure and test a few rates, for example 4%, 6% and 8%.
Is the result adjusted for inflation?
No. Use the inflation calculator on this site to see the value in today’s money.
Are contributions made at the start or end of the month?
At the end of each month. Contributions at the start would give a slightly higher result.
Does this include taxes and fees?
No. Subtract an estimate of fees from the return you enter for a more realistic figure.
Can I use it for a lump sum only?
Yes. Set the monthly contribution to zero.
Why is the growth larger than my contributions?
Because returns compound: you earn returns on earlier returns. This effect is stronger over longer periods.
How much do fees matter?
A lot over long periods. In the default example, one percentage point less return reduces the 20-year result by a noticeable amount, as shown in the page text.
This calculator gives estimates for information only. Actual figures from a bank, employer, tax authority or doctor may differ. It is not financial, tax, legal or medical advice.