How to use the investment growth calculator
Start with money you can invest today and a monthly amount your budget can keep up. Add a yearly extra only if you expect one, like a bonus or tax refund.
The return is a yearly total return before fees. It's an assumption you pick, not a promise, so set the sensitivity range to see what a lower and higher return would do.
- Enter your initial investment and starting monthly contribution.
- Add an optional yearly extra contribution and a yearly increase to the monthly amount.
- Choose whether monthly money goes in at the start or end of each month.
- Enter the expected annual return, the yearly fee (such as a fund's expense ratio) and the number of years.
- Add inflation, a goal in future dollars or today's money, and a delay in years to compare waiting.
- Read the projected value, the split between money in and growth, and the yearly table.
How the calculator projects investment growth
The yearly return you enter is treated as an effective annual rate. The calculator turns it into an equal monthly rate. Each month it adds your contribution at the timing you chose, applies growth and takes out a slice of the yearly fee.
Monthly contributions can rise after each full year, and the yearly extra goes in at each year-end. The table shows new money, total money in, growth and the ending balance for every year.
Monthly return = (1 + annual return)^(1 / 12) - 1Monthly fee factor = (1 - annual fee)^(1 / 12)Monthly contribution in year y = starting contribution x (1 + yearly increase)^yGrowth = ending balance - initial investment - all contributionsValue at today's prices = ending balance / (1 + inflation)^years
Example: $10,000 plus $300 a month for 20 years
Invest $10,000 now and add $300 at the end of each month. Assume a 7% yearly return, a 0.25% yearly fee and 2.5% inflation. After 20 years the projection is $184,522.20. You put in $82,000, so $102,522.20 is growth.
At today's prices that balance is worth about $112,608.53. Against a $250,000 goal it gets you 73.81% of the way. Reaching the goal on time would take a starting contribution of $432.98 a month.
| Years invested | Money you put in | Growth | Projected value |
|---|---|---|---|
| 10 | $46,000.00 | $23,798.14 | $69,798.14 |
| 20 | $82,000.00 | $102,522.20 | $184,522.20 |
| 30 | $118,000.00 | $286,622.84 | $404,622.84 |
Testing a lower or higher return
A small change in return makes a big difference over 20 years, because it hits every dollar again and again. Moving the example from 7% to 5% cuts the result by about $41,000. Moving it to 9% adds about $54,000.
These are what-if checks, not a forecast range. Real returns can land below the low case or above the high one. If your goal only works at the higher rate, it depends on an optimistic guess.
| Annual return before fees | Money you put in | Projected value | Growth |
|---|---|---|---|
| 5% | $82,000.00 | $143,518.44 | $61,518.44 |
| 7% | $82,000.00 | $184,522.20 | $102,522.20 |
| 9% | $82,000.00 | $238,983.90 | $156,983.90 |
Using it as a stock return calculator
Stock and fund returns go up and down from year to year. This calculator uses one smooth yearly return instead, so it shows what a steady average would produce. Use a total return figure that includes reinvested dividends, and check whether a quoted return is before or after fees.
FINRA suggests looking at multiyear returns, fees, taxes and inflation together when you judge performance. Two portfolios with the same average return can still finish at different values, because the order of good and bad years matters when money is going in.
Fees and the cost of waiting
Fees come out of the balance every year, and the money they remove stops growing too. In the example, a 0.25% fee costs $6,435.56 by year 20 compared with no fee. A 1% fee costs $24,336.25.
The waiting comparison keeps the same end date but starts the plan later. Waiting five years leaves you with $117,898.31 instead of $184,522.20. Only $18,000 of that $66,623.89 gap is skipped deposits. The other $48,623.89 is growth those dollars never got.
| Plan starts | Money put in by year 20 | Projected value | Shortfall |
|---|---|---|---|
| Now | $82,000.00 | $184,522.20 | $0.00 |
| After 3 years | $71,200.00 | $141,977.02 | $42,545.17 |
| After 5 years | $64,000.00 | $117,898.31 | $66,623.89 |
| After 10 years | $46,000.00 | $69,798.14 | $114,724.06 |
Withdrawals, taxes and other limits
This calculator models money going in. It doesn't take withdrawals out. To see how long a balance lasts while you draw from it, use our annuity payout calculator or the retirement calculator, which plans spending after you stop working.
It also leaves out taxes, trading costs, sales charges, dividends paid out in cash, rebalancing and changes in your mix of stocks and bonds. Investor.gov notes that investing has no set rate of return and every investment carries risk. Use the result to compare plans, then check product documents before you commit money.
Sources
These public references support the treatment of returns, fees, regular investing, risk and inflation on this page.