This calculator is for informational purposes only and does not constitute financial advice. Results are estimates based on inputs you provide. Consult a qualified financial advisor before making financial decisions.
Investment Growth Calculator
Project your wealth with the power of compound interest. Adjust for inflation to see your true purchasing power.
Global Settings
Historic average is ~2.5%. This calculates your "Real" purchasing power.
Investment Details
Future Value
$302,370
Interest: $172,370Real Value: $184,528
Total Interest
$172,370
Growth Over Time
The Power of Compound Interest
Compound interest helps your money grow faster because you earn interest on both the money you save and the interest that money earns. Detailed planning now can lead to exponential growth in the future.
The "Silent Killer" of Wealth: Inflation
Most investment calculators show you a massive future number, but they fail to account for inflation. If inflation averages 2.5% (the historical norm), your money loses half its purchasing power every 28 years. This tool shows you the "Real Value" of your portfolio—what that money can actually buy in today's terms.
The Rule of 72
The Rule of 72 is a mental shortcut to estimate how long it takes to double your money. Divide 72 by your annual return rate. For example, at a 7% return, your money doubles every 10.2 years (72 / 7 = 10.2).
Frequently Asked Questions
What is the 'Real Value'?
Real Value adjusts your future money for inflation. If inflation averages 2.5%, $1 million in 20 years will only buy what ~$600,000 buys today. This calculator shows you that 'purchasing power' reality. Always use real value when planning for retirement or long-term goals to avoid a false sense of security from large nominal numbers.
How does compound interest work?
Compound interest is when you earn interest on your interest — it's exponential growth. In the early years, growth is slow. But after 10-15 years, the interest payments become larger than your monthly contributions. This is the 'hockey stick' curve. Einstein reportedly called it the 'eighth wonder of the world.' Starting 5 years earlier can result in 30-40% more money at retirement.
ETF vs Mutual Fund: Which is better?
ETFs (Exchange Traded Funds) typically have lower expense ratios (0.03-0.20% vs 0.50-1.50% for mutual funds) and are more tax-efficient due to their creation/redemption mechanism. For long-term growth, low-cost index ETFs like VTI or VOO are recommended by most financial experts. The expense ratio difference alone can cost you $100K+ over 30 years on a large portfolio.
What is dollar-cost averaging (DCA)?
Dollar-cost averaging means investing a fixed amount at regular intervals regardless of market conditions. When prices are high, you buy fewer shares; when prices are low, you buy more. This strategy reduces the impact of market volatility and removes the emotion from investing. Studies show DCA performs nearly as well as lump-sum investing 70% of the time, with significantly less risk.
Should I invest in a 401(k) or IRA first?
Always contribute enough to your 401(k) to get the full employer match — that's a guaranteed 50-100% return. After that, max out a Roth IRA ($7,000/year in 2024) for tax-free growth. Then return to your 401(k) to max it ($23,000/year in 2024). For high earners, consider a backdoor Roth IRA. The tax savings from these accounts can add $500K+ to your retirement over 30 years.
Compound interest is the engine of long-term wealth. Earning returns on your previous returns turns small, consistent contributions into life-changing balances if you give them enough time. The catch: inflation and taxes silently erode those gains, and good projections account for both.
The compound growth formula
Future value with monthly contributions is FV = P(1+r)^n + PMT × [((1+r)^n − 1) / r], where P is your starting principal, PMT is your monthly contribution, r is the monthly return rate, and n is the number of months. To convert to real (inflation-adjusted) dollars, divide the result by (1 + inflation rate)^years.
When to use this calculator
Use it to set realistic expectations before you start investing — most beginners overestimate short-term returns and underestimate long-term ones. Use it again to compare investing vehicles with different fee structures: a 1% annual fee can quietly cost you a third of your final balance over 40 years. Use a conservative 6-7% real return for planning; the long-run S&P average is closer to 7% real, but no one should bet a retirement on the average year.
Worked example
Start with $10,000, add $500/month, earn a 7% real return. After 30 years you have about $620,000 in today's dollars. Bump the monthly contribution to $1,000 and the same scenario produces $1.18 million. The difference comes almost entirely from compounding the extra $500/month — the contributions themselves only add $180,000 more; the rest is growth.
Frequently asked questions
How does compound interest work?
Compound interest means you earn returns on both your original principal and on previously earned interest. Each period, your gains compound on a larger base — which is why long time horizons matter so much for wealth building.
What is a realistic stock market return?
The S&P 500 has historically averaged about 10% nominal and ~7% after inflation over very long periods. For planning, most advisors use 6-7% real returns to stay conservative.
How does inflation affect my investment returns?
Inflation erodes purchasing power. A 7% nominal return with 3% inflation is a 4% real return. Always plan in real (inflation-adjusted) dollars when projecting decades into the future.
What's the difference between simple and compound interest?
Simple interest is calculated only on the principal each period. Compound interest is calculated on principal plus accumulated interest, accelerating growth over time.
An investment calculator with inflation shows your real gain, not just nominal. A 10% return at 3.4% inflation is only 6.38% real — here is the full math.
Learn how compound interest works and how it can multiply your savings. Use our free, instant compound interest calculator to see your money grow.
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