How Investment Growth Is Projected
The initial investment grows at the compound rate for the full period. Monthly contributions are added each month and then compounded for the remaining time. The total future value is the sum of both. Changing the compounding frequency slightly changes the result: monthly compounding produces a slightly higher return than annual compounding at the same nominal rate.
Frequently Asked Questions
Future value combines two components: the lump sum growing at the compound rate, and the annuity value of regular contributions each compounding period. The formula accounts for both, so contributions made earlier in the period earn slightly more than contributions made at the end.
Historical nominal returns for a diversified US stock market index fund have averaged roughly 10% per year over the long term (7% after inflation). Bond-heavy portfolios typically average 3-5%. High-yield savings accounts and CDs currently offer 4-5%. This calculator uses whatever rate you enter; it does not predict future returns.
The Compound Interest Calculator and the Investment Calculator use the same underlying math. The Investment Calculator frames inputs in investment terms (initial investment, annual contribution with a monthly breakdown, annual rate of return) and adds an annual return comparison table.
More frequent contributions generally produce slightly better outcomes because money invested earlier has more time to compound. The difference between monthly and annual contributions of the same yearly total is typically small but grows over long time horizons.
No. This calculator shows nominal growth before inflation and taxes. Real returns (after inflation) are typically 3-7% for equities. Tax-advantaged accounts (401k, IRA, Roth) defer or eliminate taxes on growth, which is why they are recommended for long-term investing.
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