What this investment calculator does
The investment calculator projects how a starting amount plus regular monthly contributions grow over time at an assumed annual return. It separates what you put in from what compounding earns, so you can see the moment in your timeline when growth overtakes contributions — usually somewhere around year 12 to 15 for typical equity returns, and the gap only widens from there.
The math behind the projection
Two formulas, added together:
- Starting amount future value: P × (1 + r/12)12 × t
- Monthly contributions future value (ordinary annuity): PMT × [((1 + r/12)12 × t − 1) ÷ (r/12)]
where P is the starting amount, PMT is the monthly contribution, r is the annual return as a decimal, and t is years. The calculator compounds monthly (which is the convention for monthly contributions). Set the annual return to 0 to see contributions in isolation; set monthly contribution to 0 to model a pure lump-sum investment.
Picking a realistic return assumption
The most overcooked input in any investment projection is the return. A few reference points:
- S&P 500, long-term: roughly 10% nominal, 7% real (after inflation) — the figure most US investors use for diversified stock holdings.
- 60/40 stock/bond portfolio: 5-7% nominal historically.
- US Treasuries / CDs: 3-5% nominal in current environments, much less in the 2010s.
- High-yield savings: roughly the Federal Funds Rate, which has bounced between 0.25% and 5.5% in recent decades.
Use a real (inflation-adjusted) figure if you want today's purchasing power; use a nominal figure if you want the headline number you'll see on a statement.
Time in the market beats timing the market
The most striking output is what happens when you stretch the time horizon. Investing $500 a month at 7% for 20 years grows to about $246,000. For 30 years it's $586,000. For 40 years it's $1.27 million. The contribution roughly doubles between 20 and 40 years, but the final balance more than quintuples. That's not magic — it's compounding on a longer runway.
What the projection doesn't model
Constant returns (real markets are volatile), no taxes (real portfolios pay tax on dividends and capital gains), no fees (most funds charge 0.05-1% per year), no inflation adjustment unless you use a real-return figure, and no contribution changes over time. The result is a planning model — useful for "what if I save $X for Y years", not a guarantee.
Use with the other money tools
For a long-horizon nest-egg projection, the retirement calculator adds a withdrawal estimate. For simple-vs-compound education, see the interest calculator. To compute what you need to invest from, run your salary through the salary calculator.