Start with what you have, add a bit on a regular schedule, and see where it could lead. We’ll show you how much of the final balance is your money and how much is growth.
Your final balance has two parts. First, your starting amount grows on its own. Second, every contribution grows from the day it goes in. Each deposit gets less time than the one before it.
Here P is the starting amount, PMT is each contribution, n is the number of contributions and i is the growth rate per period.
If you expect 8% a year, the monthly rate isn’t simply 8 ÷ 12. We use the rate that compounds to exactly 8% over twelve months:
That way, 8% really means 8% a year, no matter how often you contribute.
Notice that growth ends up bigger than everything you contributed. That’s compounding doing its job over two decades.
It’s tempting to plug the starting amount and the final balance into a CAGR formula. Don’t. Most of that balance came from money you added along the way, so the “growth rate” would look far higher than your investments actually earned.
When money flows in over time, the right way to measure the return is a money-weighted rate like IRR. Here, that’s simply the rate you entered.
$500 a month at 7% a year for 30 years, with nothing to start.
You contribute $180,000. Look at how the growth builds: after 10 years it’s only $25,526, but by year 30 it’s $404,726. The last decade does most of the heavy lifting.
Same plan, but you raise the $500 by 3% every year.
That small yearly bump adds about $217,671 to the end result. Increasing contributions with your income is one of the most reliable levers you have.
What if you did the original $500 a month for 20 years instead of 30?
You’d contribute two-thirds as much but end up with less than half the money. Those first ten years matter more than they look.
Back to the main example. If each $250 goes in at the start of the month, the balance becomes $189,774.58 instead of $188,859.34.
The difference is small because each deposit just gets one extra month of growth. It’s worth knowing, but it’s not worth losing sleep over.
Many calculators take 8% and divide it by 12 each month. That quietly compounds to about 8.30% a year. Using that approach on our main example gives $196,523.13 instead of $188,859.34. Neither is wrong, but we think “8% a year” should mean exactly 8% a year.
Use something you can justify for your actual mix of investments, then try a few rates above and below it. Returns are never guaranteed, and the point of a calculator like this is to see a range of outcomes, not to predict one.
Not directly. To see the result in today’s dollars, subtract inflation from your expected return (roughly) and enter that instead. For example, 7% growth with 3% inflation is close to 4% real growth.
No. Fees in particular add up over long periods, so if you pay 1% a year in fees, lower your expected return by about that much.
This calculator only handles money going in. Withdrawals in retirement need a different kind of model.