📈 Investment Calculator
How Investment Growth Works
Your investments grow through compounding — earning returns not just on your principal but on previously earned returns. The longer you invest, the more powerful compounding becomes. Starting early makes a dramatic difference.
The Rule of 72
To estimate how long it takes to double your money, divide 72 by your annual return rate. At 8% per year, your investment doubles in approximately 9 years (72÷8=9).
Historical Average Returns
| Asset Class | Historical Avg Annual Return |
|---|---|
| US Stocks (S&P 500) | ~10% (nominal), ~7% (inflation-adjusted) |
| Bonds | 3–5% |
| Real Estate | 4–8% |
| Savings Account | 0.5–5% (varies) |
⚠️ Past performance does not guarantee future results. Invest based on your own risk tolerance and consult a financial advisor.
Frequently Asked Questions
Future Value = P(1+r)^n + PMT × [((1+r)^n − 1) / r], where P is the initial lump sum, r is the periodic return rate, n is the number of periods, and PMT is the regular contribution amount. This accounts for both compound growth and ongoing contributions.
Historically, a diversified US stock market index has returned about 7–10% annually before inflation (roughly 4–7% after inflation). Bond-heavy portfolios return less. These are long-term historical averages — any single year can vary significantly.
Nominal return is the raw percentage gain. Real return adjusts for inflation. If your portfolio returns 8% but inflation is 3%, your real return is about 5% — meaning your purchasing power grew by 5%. Long-term planning should consider real returns.
A common guideline is to invest 15% of your gross income for retirement. Start as early as possible — due to compounding, investing $200/month from age 25 can produce more than investing $400/month starting at age 35.
Dollar-cost averaging means investing a fixed amount at regular intervals regardless of market conditions. It removes emotion from investing, automatically buying more shares when prices are low and fewer when prices are high, reducing average cost over time.