About this Investment Calculator
Successful investing is about time in the market, not timing the market. This calculator demonstrates the power of compound interest combined with consistent monthly contributions (Dollar Cost Averaging).
How to use this calculator
- Enter your Starting Amount (Initial lump sum).
- Input your Monthly Contribution.
- Set the Annual Return rate (e.g., 7-10% for stocks).
- Enter the Investment Length in years.
Accuracy and testing
Review formula sources, default test cases, assumptions, unit handling, rounding rules, and changelog for this calculator.
How this calculator works
Inputs explained
Starting Amount
The money you have today to invest.
Additional Contribution
Money you add to the account every month.
Annual Return
The expected percentage growth. The S&P 500 historically averages about 10% before inflation.
Understanding your results
Example scenarios
Slow & Steady
Start with $0, invest $500/mo at 8% for 30 years. Result: ~$745,000. You contributed only $180,000; the rest is interest.
Lump Sum
Invest $10,000 once at 7% for 20 years (no additions). Result: ~$40,000.
Key Features
- Monthly contribution support
- Total Interest breakdown
- Principal tracking
Things to Keep in Mind
Assumes a constant rate of return, which does not happen in real stock markets (volatility).
Tips & Best Practices
- Start early. The 'cost of waiting' is high. Investing $100/mo starting at age 25 yields much more than investing $200/mo starting at age 45.
- Reinvest dividends to maximize the compounding effect.
- Consider inflation. A 7% return is a good 'real return' estimate (10% nominal - 3% inflation).
Glossary of Terms
- Compounding
- Earning interest on your interest.
- Principal
- The total amount of your own money you have put into the investment.
- ROI
- Return on Investment. (Total Value - Total Cost) / Total Cost.