Investment Calculator
Project your investment growth with compound interest and regular contributions.
Investment Growth Formulas
Understanding Investment Growth
Investing is one of the most effective ways to build wealth over time. Our investment calculator helps you visualize how your money can grow through the power of compound interest and regular contributions.
Whether you're planning for retirement, saving for a major purchase, or simply growing your wealth, understanding projected returns helps you make informed decisions about your investment strategy.
Compound Growth
See how reinvested returns accelerate wealth building.
Regular Contributions
Calculate the impact of consistent monthly investing.
Goal Planning
Determine what you need to reach your targets.
Real Returns
Account for inflation to see true purchasing power.
The Power of Compound Interest
Albert Einstein allegedly called compound interest the 'eighth wonder of the world.' Whether or not he said it, the math is undeniably powerful. When your returns generate their own returns, growth accelerates dramatically over time.
Time is Your Greatest Asset
$10,000 invested at 8% becomes $21,589 in 10 years, $46,610 in 20 years, and $100,627 in 30 years. The last decade adds more than the first two combined.
Reinvest Everything
Compounding only works when returns are reinvested. Taking dividends or gains breaks the compounding cycle and significantly reduces long-term growth.
Start Early
Someone investing $200/month from age 25 will have more at 65 than someone investing $400/month starting at 35. Earlier beats larger.
Consistency Beats Timing
Regular monthly investing (dollar-cost averaging) usually outperforms trying to time the market. Stay consistent through ups and downs.
Historical Investment Returns
Understanding historical returns helps set realistic expectations for your investments.
| Asset Class | Historical Return | Volatility | Best For |
|---|---|---|---|
| S&P 500 Index | 10-11% | High | Long-term growth, 10+ years |
| Total Stock Market | 9-10% | High | Broad diversification |
| International Stocks | 7-9% | High | Global diversification |
| Bonds (Aggregate) | 4-6% | Low | Stability, income |
| Real Estate (REITs) | 8-10% | Medium | Income + growth |
| Money Market | 2-4% | Very Low | Emergency fund, short-term |
Investment Strategies by Time Horizon
Your investment approach should align with when you'll need the money. Here's how to think about asset allocation based on time horizon.
0-3 Years (Short-Term)
Money needed soon should stay safe: high-yield savings, money market funds, or short-term bonds. Don't risk money you'll need for a near-term down payment or emergency fund in stocks.
3-10 Years (Medium-Term)
Balance growth and stability: 60% stocks, 40% bonds is a classic mix. You have time to recover from downturns but shouldn't be 100% aggressive. Good for saving for a house or college.
10-20 Years (Long-Term)
Time to be aggressive: 80-90% stocks provides maximum growth potential. Market corrections are buying opportunities at this stage. Retirement savings for someone in their 40s fits here.
20+ Years (Very Long-Term)
Go all-in on growth: 90-100% stocks maximizes long-term returns. Every major market crash has recovered and reached new highs given enough time. Young investors should embrace this horizon.
Building Your Investment Portfolio
A well-constructed portfolio balances risk and reward while keeping costs low. Here are the key principles.
Diversify Broadly
Don't put all eggs in one basket. A total stock market index fund gives you exposure to thousands of companies. Add international stocks and bonds for additional diversification.
Minimize Costs
Investment fees compound just like returns—but against you. A 1% fee vs 0.1% fee costs tens of thousands over a career. Choose low-cost index funds with expense ratios under 0.2%.
Rebalance Periodically
As different assets grow at different rates, your allocation drifts. Rebalance annually to maintain your target mix. This naturally 'sells high and buys low.'
Stay the Course
The biggest enemy of investment returns is investor behavior. Panic selling in downturns locks in losses. Those who stayed invested through 2008-2009 and 2020 recovered and thrived.
Use Tax-Advantaged Accounts
Maximize 401(k)s, IRAs, and HSAs before taxable accounts. Tax-free or tax-deferred growth significantly boosts long-term returns.
Match Risk to Goals
Different goals need different investments. Retirement in 30 years can handle volatility; a house down payment in 2 years cannot. Separate accounts for separate goals.
Common Investment Mistakes
Avoiding these errors is often more important than picking the 'best' investments.
Waiting to Start
Time in the market beats timing the market. Waiting for the 'right moment' costs you compound growth. Start now with whatever you have.
Emotional Decisions
Buying high (when excited) and selling low (when scared) is the most common and costly mistake. Stick to your plan regardless of market noise.
Chasing Performance
Last year's best fund rarely repeats. Chasing hot investments usually means buying high after gains have already happened.
Paying High Fees
Active funds charging 1%+ rarely beat index funds long-term. A 1% annual fee on $500,000 is $5,000/year—money that should be compounding for you.
Over-Concentrating
Putting too much in one stock, sector, or asset class increases risk without increasing expected returns. Even great companies can fail.
Checking Too Often
Daily portfolio checking leads to emotional decisions and stress. Long-term investors should check quarterly at most. The noise isn't information.
Frequently Asked Questions
What's a realistic rate of return to expect?
For a diversified stock portfolio, 7-10% annually before inflation (4-7% after inflation) is historically reasonable. Conservative bond-heavy portfolios might expect 4-6%. Be skeptical of anything promising more than 12% consistently—it's either very high risk or a scam.
How much should I invest each month?
A common guideline is saving 15-20% of income for retirement, including employer matches. Start with what you can afford and increase by 1% annually. Even $100/month becomes significant over decades. The best amount is more than you're investing now.
Should I invest a lump sum or spread it out?
Statistically, lump sum investing beats dollar-cost averaging about 2/3 of the time because markets rise more than they fall. However, spreading investments over 6-12 months can reduce regret if markets drop immediately after investing. Choose what lets you sleep at night.
How do I account for inflation?
Subtract expected inflation (historically 3%) from your nominal return to get your 'real' return. $1 million in 30 years won't buy what $1 million buys today. Our calculator shows inflation-adjusted values to help you plan realistically.
Is it too late to start investing?
It's never too late, but sooner is always better. At 50, you might have 15-20 working years plus decades of retirement. Focus on maximizing contributions, using catch-up provisions if available, and appropriate (not overly conservative) asset allocation.
How important is diversification?
Very important. Diversification is the only 'free lunch' in investing—it can reduce risk without reducing expected returns. A globally diversified portfolio protects against any single company, sector, or country underperforming.
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