This investment calculator projects how your money grows when you combine a starting amount, regular monthly contributions, and compound returns. Enter your numbers to see the end balance, total contributions, and total interest earned, plus a year-by-year growth table.
The projection assumes a constant annual return compounded monthly — a simplification, since real markets fluctuate. Still, it captures the two forces that drive long-term wealth: consistent contributions and compound growth. The longer the timeline, the more the interest-earned line dominates the contributions line.
How Investment Growth Is Calculated
The calculator compounds your balance monthly and adds each contribution at month-end. The closed-form version combines two standard formulas:
Future value of the starting amount: FV = P(1 + r/12)^(12t)
Future value of monthly contributions: FV = PMT × [((1 + r/12)^(12t) − 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 key insight: growth is exponential, not linear. Money invested in year 1 compounds for the entire period, which is why the same dollar contributed early is worth far more than one contributed late.
What Return Rate Should You Use?
Your assumed return should match your asset mix and whether you want nominal or inflation-adjusted results:
- U.S. large-cap stocks (S&P 500): roughly 10% average annual return since 1926, about 7% after inflation.
- 60/40 stock-bond portfolio: historically around 8% nominal.
- Investment-grade bonds: roughly 4%–5% long term.
- High-yield savings / CDs: typically 3%–5% depending on rates.
- Using 6%–7% is a common conservative planning assumption for diversified stock portfolios.
Also remember fees: a 1% annual advisory fee on a 7% return leaves 6%, which over 30 years reduces the final balance by roughly a quarter.
Example: $10,000 Start + $500/Month for 20 Years
Start with $10,000, add $500 every month, and assume a 7% annual return compounded monthly for 20 years.
The starting $10,000 grows to about $40,387 on its own. The 240 monthly contributions of $500 (totaling $120,000) grow to about $260,463.
Combined end balance: roughly $300,851. You contributed $130,000 in total, so about $170,851 — more than half the final balance — came from investment returns. Extending to 30 years, the same plan reaches roughly $691,000, showing how dramatically the final decade of compounding matters.
Frequently Asked Questions
What is a realistic annual return for investments?
The S&P 500 has returned about 10% annually on average since 1926, or roughly 7% after inflation. Diversified portfolios with bonds return less. Most financial planners model 6%–8% for stock-heavy portfolios; using 7% is a reasonable middle-ground assumption for long horizons.
How much will $500 a month be worth in 20 years?
At a 7% annual return compounded monthly, $500 invested every month grows to about $260,000 in 20 years — of which only $120,000 is your own contributions. At 30 years, it reaches roughly $610,000, illustrating the power of the extra decade of compounding.
Does this calculator account for inflation?
Not directly. To see results in today’s purchasing power, use an inflation-adjusted (real) return — for example, enter 7% instead of 10% for stocks, since inflation has historically averaged around 3% per year. The output then represents constant, current-year dollars.
Is it better to invest a lump sum or monthly?
Historically, investing a lump sum immediately beats spreading it out (dollar-cost averaging) about two-thirds of the time, because markets rise more often than they fall. However, monthly investing matches how most people earn income and reduces the risk of bad timing.
How do taxes affect investment returns?
In taxable accounts, dividends and realized gains are taxed yearly, reducing the effective compounding rate. Tax-advantaged accounts like a 401(k) or IRA let the full return compound untaxed until withdrawal (or tax-free for Roth accounts), which can add substantially to the final balance over decades.