Investment Calculator

Our comprehensive investment calculator helps you project the future value of your investments by accounting for compound interest, regular contributions, and various real-world factors. Whether you're planning for retirement, saving for a major purchase, or building long-term wealth, this tool provides accurate projections to guide your financial decisions.

The calculator features advanced options including multiple compounding frequencies, inflation adjustment to show real purchasing power, tax considerations on investment returns, and flexible contribution schedules. Visual charts and detailed year-by-year tables help you understand exactly how your money grows over time.

Understanding Compound Interest

Compound interest is often called the "eighth wonder of the world" because it allows your money to grow exponentially over time. Unlike simple interest, which only earns returns on your initial investment, compound interest earns returns on both your principal and all previously earned interest.

For example, if you invest $10,000 at a 7% annual return, you'll earn $700 in the first year. In the second year, you earn 7% on $10,700 (your original investment plus the first year's earnings), which equals $749. This snowball effect becomes increasingly powerful over longer time periods, which is why starting early is crucial for building wealth.

The frequency of compounding also matters. Money compounded daily grows faster than money compounded annually, even at the same interest rate. Our calculator lets you choose from daily, monthly, quarterly, or annual compounding to match your actual investment vehicle.

The Power of Regular Contributions

While compound interest on a lump sum is powerful, adding regular contributions dramatically accelerates wealth building. Even modest monthly contributions can result in substantial wealth over decades thanks to the combination of consistent saving and compound growth.

Consider this example: A $10,000 initial investment at 7% annual return grows to about $19,672 after 10 years. However, if you add just $500 monthly during that same period, your investment grows to approximately $97,071. The regular contributions account for $60,000 of that total, while compound interest generates over $27,000 in earnings.

Inflation: Protecting Your Purchasing Power

Inflation erodes the purchasing power of money over time. A dollar today buys more than a dollar will buy in 20 years. This is why it's essential to consider inflation when planning long-term investments. Our calculator includes an inflation adjustment feature that shows both nominal returns (the actual dollar amount) and real returns (what those dollars can actually buy).

Historical U.S. inflation has averaged around 3% annually over the long term, though it varies considerably by period. If your investment returns 7% annually but inflation is 3%, your real return is only 4%. This real return represents the actual increase in your purchasing power.

Tax Considerations for Investors

Taxes significantly impact investment returns, and the tax treatment varies depending on the account type and investment holding period. Our calculator includes an optional tax consideration feature to help you estimate after-tax returns.

In taxable investment accounts, you typically pay capital gains tax when you sell investments for a profit. Long-term capital gains (investments held over one year) are taxed at preferential rates of 0%, 15%, or 20% depending on your income level. Short-term gains are taxed as ordinary income at your marginal tax rate.