Investment Calculator

The math behind compound growth

This calculator projects how an investment grows when you start with a lump sum, add money regularly, and let returns compound over time. Compounding is the engine: each period your balance earns a return, and the next period that return earns its own return. The longer the horizon, the more the curve bends upward — which is why the growth chart climbs gently for the first several years and then accelerates. Everything is computed locally in your browser; no figures are sent anywhere.

Internally the tool grows your balance one compounding period at a time. If you choose monthly compounding, your annual return is split into twelve small monthly steps; each step multiplies the balance by (1 + r/n), where r is the annual rate as a decimal and n is the number of periods per year. Daily compounding uses n = 365, annually uses n = 1. More frequent compounding produces a slightly higher result, but the difference between daily and monthly is small at ordinary rates — the headline driver is the rate and the time, not the compounding frequency.

A worked example

Take the defaults: $10,000 initial, $200 per month, a 7% annual return, monthly compounding, over 20 years. You contribute the initial $10,000 plus $200 × 12 × 20 = $48,000 in monthly deposits, for $58,000 of your own money total. Yet the projected balance lands well over $150,000. The gap — roughly $100,000 — is pure compound growth on money you never deposited. That is the entire point the chart is trying to show you: the blue "portfolio value" line pulls away from the green dashed "total contributed" line, and the widening space between them is your gains.

The year-by-year table breaks this down so you can see the inflection. In early years, gains are a thin sliver because there is little balance to compound. By year 15 the annual gain alone can exceed a full year of your contributions — the portfolio is now doing more of the work than you are.

Why the "Real Value" column changes everything

Tick Inflation-adjusted return and enter an inflation rate (2.5% by default). The calculator then shows a real value alongside the nominal balance. Real value answers the honest question: what will this money actually buy? It divides the future balance by (1 + inflation)^years to express the result in today's purchasing power. At 2.5% inflation over 20 years, prices roughly multiply by 1.64, so a nominal $150,000 is worth only about $91,000 in today's dollars. Ignoring inflation is the most common way people overestimate their future wealth. Always look at the real number when planning for goals decades away.

Choosing realistic inputs

Common mistakes this projection can hide

• Assuming a smooth line. Real markets do not return exactly 7% every year — they swing. This model uses a constant rate, which is fine for planning but will never match any single real year. Treat the curve as an average, not a forecast.
• Ignoring fees and taxes. The projection is gross. A 1% annual fee compounds against you the same way returns compound for you, quietly removing a large slice over decades. Subtract your expected fee from the return input to approximate the net result.
• Reading nominal as real. The big blue number is before inflation. Enable inflation mode before you celebrate.
• Forgetting that contributions are constant. The model assumes your $200/month never rises. In reality, raising contributions with income is one of the most powerful levers — re-run the calculation periodically as your savings rate grows.

How to use the result

Run two or three scenarios and compare them rather than trusting a single number. Try a pessimistic return (say 4%) with inflation on to see your conservative floor, then an optimistic one (8%) for the ceiling. The truth almost always lands between them. Use the year-by-year table to find the moment gains overtake contributions — that crossover year is a useful, motivating milestone, and it arrives sooner the earlier you start.