How to Use This Investment Calculator
Enter your initial investment, monthly contribution, expected return rate, and time horizon. The calculator projects your portfolio growth using compound interest and shows both nominal and inflation-adjusted (real) values. Click "Show Year-by-Year Projection" for detailed annual breakdowns.
The Power of Compound Interest
Compound interest is when you earn returns not just on your initial investment, but also on your accumulated earnings. Over long periods, this creates exponential growth. Starting early and investing consistently are the two most powerful factors in building wealth.
Understanding ROI
Return on Investment (ROI) measures how much your investment has grown relative to what you put in. A 100% ROI means you've doubled your money. The calculator shows both nominal ROI and real (inflation-adjusted) ROI to give you a clearer picture of actual purchasing power gains.
Expected Return Assumptions
The S&P 500 has historically returned about 10% annually before inflation, or 7% after inflation. However, past performance doesn't guarantee future results. Conservative estimates might use 6-7%, while more aggressive portfolios might assume 8-10%. Bond-heavy portfolios typically return 4-6%.
Why Inflation Matters
Inflation erodes purchasing power over time. A dollar today buys more than a dollar in 20 years. The "Real Value" shown represents what your future portfolio would be worth in today's dollars. This helps you plan for actual retirement needs rather than inflated future numbers.