Investment Calculator

Visualize how your money can grow over time. Calculate the future value of your one-time investments and monthly SIPs (Systematic Investment Plans) with compound interest.

Inputs Explained

  • Initial Lump Sum: The starting amount of money you are investing today.
  • Monthly Contribution: The amount you plan to add to your investment every month.
  • Expected Return (%): The annual percentage growth rate you anticipate (e.g., 7-10% for stocks).
  • Period: How many years you will keep the money invested.

How it Works

The calculator uses the compound interest formula to grow your initial lump sum and treats your monthly contributions as a series of periodic payments that also compound over time.

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Investment Calculator

Lump sum + monthly contribution growth

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Future Value
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📐 Combined Formula

FV = PV×(1+r)ⁿ + PMT×[(1+r)ⁿ-1]/r

Combines lump sum + monthly!

Growing Your Wealth

Step-by-Step Example

You invest $10,000 initially and add $500 per month for 20 years at an 8% annual return.

  • Total Contributions: $10,000 + ($500 × 12 × 20) = $130,000
  • Investment Gains: Interest on lump sum + Interest on monthly deposits ≈ $202,000
  • Future Value: $130,000 + $202,000 = $332,000

The Power of Compounding: Your money earned more money than you put in!

Use Cases

  • Retirement Planning: Estimate how much you'll have for retirement based on current savings.
  • Goal Saving: Plan for a down payment on a house, wedding, or child's education.
  • Financial Independence: Calculate your "FI" number and when you can stop working.

Frequently Asked Questions

Compound interest is essentially "interest on interest." It means that in each period, you earn interest not only on your original principal contribution but also on the accumulated interest from previous periods. Over time, this creates a snowball effect where your wealth grows exponentially rather than linearly. For example, a 10% return on $100 earns you $10 the first year, bringing your total to $110. The next year, you earn 10% on $110, which is $11, not just $10. Over 20 or 30 years, this small difference results in massive growth.

A "good" rate of return depends entirely on your risk tolerance and investment goals. Historically, the US stock market (S&P 500) has returned an average of about 10% annually before inflation (or roughly 7% after inflation) over long periods. Safer investments, like high-yield savings accounts or government bonds, typically offer lower returns in the 3-5% range but come with much less risk of loss. For aggressive investors, calculating with 8-10% is optimistic but standard, while conservative planners often use 5-6% to be safe.

Most financial advisors and general rules of thumb suggest saving between 15% and 20% of your gross income for retirement and other long-term goals. However, the exact amount depends on when you start. If you start in your 20s, 10-15% may be sufficient. If you start in your 40s, you may need to save 25% or more. The most important factor is consistency. Even small, regular contributions (like $50 or $100/month) can grow into substantial sums over 20-30 years due to the power of compounding.

No, this standard investment calculator projects the "nominal" future value of your money. This is the actual dollar amount you would see in your account balance. However, due to inflation, the prices of goods and services will also rise over time, reducing what that money can buy. To estimate the "real" purchasing power of your future wealth, you should subtract the expected inflation rate (historically around 2-3%) from your investment return rate. For example, use a 7% return instead of 10% to account for 3% inflation.

Sources & References