Investment Calculator

The investment calculator tool forecasts the amount that can be achieved based on growth from capital gains. By inputting the initial principal amount, interest rate and length of time invested, the tool calculates the balance taking into account compound interest to end value. This version offers more features than a simple forecast. It allows for regular additional investments, adjustment for inflation effects and application of capital gains taxes. In addition, you can also calculate the required interest rate or number of years needed to achieve a goal.

What is an investment?

Investing is the act of purchasing assets with the expectation that they will generate income or increase in value over time. The goal is simple: to end up with more money than was originally invested. The difference between what you invest and what you end up with is your gain, also known as return. This difference grows continually through compounding interest. The longer the investment period, the faster the total amount will grow because each period's balance earns a return that then earns another return in the next period.

Here's how to use this calculator:

Start with the three familiar inputs: the initial principal amount, the expected annual interest rate and the number of years you want to invest for. Select how often the compounding will occur, and the tool instantly forecasts the ending value.

Then only select the options you want to use. By setting up regular additional investments, you can simulate continuous investing according to your frequency and schedule. For example, if you put a certain amount into an index fund every month. If you select inflation, then you will see the ending value in terms of today's currency. Applying capital gains tax allows you to estimate how much money you'll actually have left after selling.

This calculator also allows for back-solving. If you leave one of the four main fields blank and fill in the remaining three fields, the tool will calculate the missing field. This can help answer questions like: What rate or time period is needed to reach a particular goal?

How are the final values calculated?

A compound interest formula is used for the entire invested capital amount.

PV is the initial investment amount, r is the annual rate of return in decimal form, k is the number of times interest is compounded per year, and n is the length of time in years. If you invest $100,000 at an annual rate of 8% with interest compounded annually for a period of 10 years, then r = 0.08, k = 1, and n = 10.

If you regularly invest a certain amount of money on top of that, it acts like an annuity. If you make a payment at the end of each period, your total will increase by:

The table below provides examples of each field and corresponding values.

Types of investments that can be simulated:

This calculator can be used for any type of investment as long as you can provide the starting capital amount, return rate and time period. The actual options are more varied than in this short list below but the hard part is to pick a honest and reliable return rate for each investment.

Savings with transferability or a regular savings account have low risk and offer fixed interest rates that are easily predictable, so they fit well into the input fields for this. Bonds pay interest as compensation for taking on credit and interest risks. Safe issuers pay less interest while more risky issuers offer higher interest. Inflation-linked US government bonds, on the other hand, are linked to the consumer price index.

Stocks, index funds and exchange traded funds (ETFs) are not fixed income investments but it is reasonable to use long term average returns for planning purposes. Real estate such as rental properties or real estate investment trusts (REITs), and commodities like gold and oil are also common investing options. Use historical averages or conservative estimates of return for these investments.

What return should be used?

The return is the most important and at the same time the easiest to err input parameter. A conservative estimate helps avoid a lack of savings.

From 1957 until the end of 2025, the S&P 500's average annual return with dividends reinvested was about 10.68 points, or about 6.80 points after inflation; historical bond returns have been about 3 to 5 points, and U.S. real estate prices have risen by an average of about 5.4 points per year over the long term. Because a diversified portfolio of stocks, bonds and cash is typically a mix of these averages, many financial planners often use values near 5 to 7 points as a standard.

The S&P 500 fell by 18 points in 2022. In the following two years it rose by 26 and 25 points respectively. As is often said, what matters is not when you get into a market but how long you stay in it.

Tips for realistic predictions:

Use realistic and not idealistic returns. Make sure the compounding frequency matches that of your simulated account. If the investment horizon is long, turn on inflation as purchasing power matters more than superficial numbers. Treat taxes and fees as real costs since both will ultimately reduce the amount available to you.