title: Investment Calculator description: Calculate compound interest, future investment value, and see how your money grows over time with regular contributions
What is an Investment Calculator?
An Investment Calculator helps you visualize the power of compound interest and long-term investing. Enter your initial investment, monthly contributions, expected returns, and investment timeline to see your projected wealth growth.
Understanding Compound Interest
Compound interest is often called the "eighth wonder of the world" because it allows your money to grow exponentially over time.
The Compound Interest Formula
A = P(1 + r/n)^(nt) + PMT × (((1 + r/n)^(nt) - 1) / (r/n))
Where:
- A = Future value
- P = Principal (initial investment)
- PMT = Regular payment (monthly contribution)
- r = Annual interest rate
- n = Number of times compounded per year
- t = Time in years
How Your Money Grows
| Years | $10,000 Initial + $500/month @ 8% |
|---|---|
| 5 | $46,319 |
| 10 | $101,854 |
| 15 | $186,475 |
| 20 | $316,453 |
| 30 | $789,542 |
The Power of Starting Early
Investor A vs Investor B
| Factor | Investor A | Investor B |
|---|---|---|
| Starts at age | 25 | 35 |
| Invests until | 65 | 65 |
| Years investing | 40 | 30 |
| Monthly amount | $300 | $300 |
| Total invested | $144,000 | $108,000 |
| Final value (8%) | $932,189 | $440,445 |
Investor A has 2x the wealth despite only investing $36,000 more.
Types of Returns by Asset Class
| Asset Class | Historical Avg Return | Risk Level |
|---|---|---|
| S&P 500 Index | 10-11% | Medium |
| Total Bond Market | 4-5% | Low |
| Real Estate (REITs) | 9-10% | Medium |
| High-Yield Savings | 4-5% | Very Low |
| Individual Stocks | Varies | High |
Frequently Asked Questions
What return rate should I use?
The S&P 500 has averaged about 10% annually over the long term. However, a conservative estimate of 6-8% accounts for fees and inflation.
How does inflation affect my investments?
Our calculator shows an inflation-adjusted "real value" so you can see your purchasing power, not just the nominal dollar amount.
Should I invest a lump sum or dollar-cost average?
Historically, lump sum investing outperforms about 2/3 of the time. However, dollar-cost averaging (regular contributions) reduces risk and is more practical for most people.
What about taxes?
This calculator shows pre-tax values. Consider tax-advantaged accounts (401k, IRA, Roth IRA) to maximize your returns.
Is 8% a realistic return?
For a diversified portfolio of stocks and bonds held over 20+ years, 6-8% after inflation is reasonable. Short-term returns vary greatly.
Investment Strategies
The 60/40 Portfolio
- 60% stocks for growth
- 40% bonds for stability
- Historically returns ~7% with lower volatility
Age-Based Allocation
A common rule: Subtract your age from 110 to get your stock percentage.
- Age 30: 80% stocks, 20% bonds
- Age 50: 60% stocks, 40% bonds
- Age 70: 40% stocks, 60% bonds
Index Fund Investing
Low-cost index funds that track the market often outperform actively managed funds over time.
Tips for Maximum Growth
- Start now — Even small amounts compound significantly over decades
- Automate contributions — Set up automatic monthly investments
- Increase with income — Raise contributions when you get raises
- Minimize fees — Choose low-cost index funds (0.03-0.20%)
- Reinvest dividends — Let compound growth work for you
- Stay invested — Time in the market beats timing the market
- Tax-advantaged accounts — Maximize 401k, IRA, and HSA contributions
Common Investment Mistakes
| Mistake | Why It Hurts |
|---|---|
| Starting late | Loses decades of compound growth |
| Trying to time the market | Missing best days tanks returns |
| High-fee funds | 1% fee can cost $100,000+ over 30 years |
| Panic selling | Locks in losses during downturns |
| Not diversifying | Concentrated risk can devastate portfolio |