Investment Return Calculator

The Investment Return Calculator below provides an estimate of how your investments will grow over time based on your age, current amount invested, future monthly contributions, and expected annual return.

Total Contributions:

Estimated Final Amount:

Best Practices/Notes

    • For the “Expected Annual Return” use an inflation-adjusted growth rate.
      • Though U.S. stocks have averaged about 10% annual nominal growth for most of their history (see here), using a nominal return will overestimate how much purchasing power you will have when in retirement. This is why I recommend using an inflation-adjusted estimate.
      • For a portfolio of U.S. stocks, this means a 7% inflation-adjusted return (historically). I don’t have any particular recommendation on what return you should use, however, I suggest being conservative in your estimates.
    • Investments are made at the BEGINNING of the month and compound monthly
      • If you try and compare the output from this calculator with another one, keep in mind that this one adds the monthly contribution at the beginning of each month and then grows it by the monthly expected annual return [i.e. (1 + expected annual return)^(1/12)].
    • Only the “Current Amount Invested” compounds in the first month
      • The monthly contributions do not start until after the current amount invested has had one month to grow on its own. It is at that point that we start adding the monthly contributions and compounding your estimated wealth monthly. I do this so that in one year you will make exactly 12 monthly contributions. Without this change, you would make 13 monthly contributions in the first year, which wouldn’t make sense.

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All investments involve some degree of risk, including loss of principal. There can be no assurances that any investment will be profitable or that you will achieve your investment goals. Your actual results will vary based upon your individual situation, when you invest, future market performance, and other factors. Past performance does not guarantee future results. Analyses in this report indicating investment performance are based on past performance. Your portfolio’s performance may vary significantly from, and potentially be lower than, the performance presented.

The returns are not reflective of any specific product, and do not include any fees or expenses that may be incurred by investing in specific products. The actual returns of a specific product may be more or less than the returns used in this report. In addition, depending on what investment or insurance product you purchase, you may incur front-end charges, annual expenses, advisory or performance fees. For certain products, you may incur surrender charges, income taxes and penalties if the product is sold before a pre-determined period. For variable life insurance and annuity products, you will incur mortality and expense fees. None of these expenses have been factored into the projections. If included, fees and other expenses would materially reduce the projections.

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