Investment Calculator

What is an Investment Calculator?

An investment calculator helps you estimate how your money will grow over time when invested. By accounting for your initial investment, regular contributions, expected rate of return, and investment period, you can project the future value of your investments and plan your financial goals.

How to Use This Calculator

1. Enter Initial Investment: Input the lump sum amount you're starting with
2. Set Monthly Contribution: Enter how much you'll add to your investment each month
3. Choose Investment Period: Select how many years you plan to invest
4. Set Expected Return: Enter your anticipated annual return rate
5. Select Compounding Frequency: Choose how often interest is compounded
6. Review Results: See your projected investment growth and returns

Understanding Your Results

Future Value

The total value of your investment at the end of the investment period, including all contributions and compound growth.

Total Contributions

The sum of your initial investment plus all regular monthly contributions made during the investment period.

Total Earnings

The difference between your future value and total contributions—this is pure investment growth from compound returns.

Effective Annual Yield

Your actual annual return rate accounting for the compounding frequency you selected.

The Formula Behind the Calculation

Future Value Formula with Regular Contributions:

FV = P(1+r/n)^(nt) + PMT × [((1+r/n)^(nt) - 1) / (r/n)]

Where:

• FV = Future Value
• P = Principal (initial investment)
• r = Annual interest rate (decimal)
• n = Number of times interest compounds per year
• t = Time in years
• PMT = Regular monthly contribution

Compounding Frequency Explained

More frequent compounding results in slightly higher returns due to the "interest on interest" effect.

Investment Strategy Tips

Start Early

Time is your most powerful ally when investing. Starting early allows compound interest to work its magic over decades.

Stay Consistent

Regular contributions, even small ones, can significantly increase your investment returns over time through dollar-cost averaging.

Reinvest Dividends

Reinvesting dividends and earnings accelerates compound growth rather than taking them as cash.

Diversify Your Portfolio

Spread investments across different asset classes to balance risk and return potential.

Expected Returns by Asset Class

Note: Past performance does not guarantee future results. These are historical averages and actual returns will vary.

Frequently Asked Questions

What return rate should I use?

For long-term stock market investments, 7-10% is commonly used. For more conservative investments, use 4-6%. These are pre-tax, nominal returns.

How does inflation affect my investment?

Inflation erodes purchasing power. If you expect 3% inflation and 7% returns, your real return is approximately 4%.

Should I choose monthly or annual compounding?

Most investments compound based on their type. Savings accounts typically compound daily or monthly, while some bonds compound annually.

What about taxes?

This calculator shows pre-tax returns. Actual returns will be reduced by capital gains taxes on non-retirement accounts.

When should I start investing?

The best time to start investing is as early as possible. Even small amounts invested early can grow significantly over time.

Disclaimer: This calculator provides estimates for educational purposes only. Actual investment returns will vary and may include losses. Consult with a qualified financial advisor for personalized investment advice.