Finance
See how an initial amount and monthly contributions grow over time with compounding returns.
| Year | Contributed this year | Interest this year | Balance |
|---|
This calculator compounds monthly: each month, interest is calculated on your current balance, then your monthly contribution is added on top of that. Over time, you start earning interest on your past interest as well as your original contributions — the "compounding" effect that makes long time horizons so powerful for growing wealth.
The projection assumes a constant annual return applied evenly across the whole period. Real markets don't move in a straight line — some years will be well above this rate, others below or negative — so treat the result as a long-run average estimate, not a guarantee.
Common questions about compound interest and how to use this calculator.
Simple interest is calculated only on your original principal, so it grows by the same dollar amount every period. Compound interest is calculated on your principal plus all previously earned interest, so the dollar amount of growth increases over time even at a constant rate. Over long periods, that difference becomes dramatic — it's the main reason starting to invest early matters more than the exact amount you start with.
There's no single correct number, since future returns aren't guaranteed. Many long-term planning tools use 6-8% as a rough estimate for a diversified stock portfolio over multi-decade periods, based on historical averages, while more conservative estimates use 4-5% to account for fees, inflation, and a more cautious outlook. It's often useful to run the calculation at two or three different rates to see a range of outcomes rather than anchoring on one number.
No — this calculator shows nominal growth, meaning future dollars, not adjusted for the fact that a dollar in 20 years will buy less than a dollar today. A common approach is to use a 'real' return rate (your expected return minus expected inflation, often assumed around 2-3%) instead of the nominal rate if you want the result expressed in today's purchasing power.
Often more than people expect, because of how compounding accelerates over time. Someone who invests for 10 years and then stops can end up with a similar or larger balance decades later than someone who starts 10 years later and contributes for twice as long, purely because the early investor's money had more time to compound. This is why financial advisors frequently emphasize time in the market over trying to perfectly time contributions.
No. This is a pre-tax, pre-fee projection. Taxable accounts may owe capital gains or dividend taxes along the way (reducing effective growth), while tax-advantaged accounts like a 401(k) or IRA can defer or eliminate some of that drag. Investment fees, even small ones, also compound over time and can meaningfully reduce your actual future value compared to this estimate.
