What the investment calculator does
This tool projects the future value of an investment that starts with a lump sum and receives regular contributions over a number of years at an assumed annual return. It separates the final value into the money you put in and the returns generated, so you can see how much of the result is the market working for you. It is the general-purpose version of the retirement calculator: use it for a house deposit, a child's education fund, or simply to compare two savings plans.
The math behind the projection
FV = P(1 + r)ⁿ + C × ((1 + r)ⁿ − 1) / r
P = initial investment C = regular contribution
r = return per period n = number of periodsThe first term grows the starting balance; the second is the future value of an ordinary annuity — the sum of every contribution, each compounded for the time remaining after it was made. Contributions are assumed to be made at the end of each period; if you invest at the start of each month instead, multiply the second term by (1 + r) for a slightly higher result.
Worked example
Invest $10,000 today and add $300/month for 20 years at 8% annual return (monthly rate 0.6667%, 240 periods).
Lump sum: 10000 × (1.006667)²⁴⁰ ≈ $49,300
Contributions: 300 × ((1.006667)²⁴⁰ − 1) / 0.006667 ≈ $176,700
Final value ≈ $226,000 Invested: $82,000 Returns: $144,000Nearly two-thirds of the final value is return on investment. Halve the rate to 4% and the final value drops to about $132,000; double the monthly contribution to $600 and it rises to about $403,000. The contribution lever is the more reliable one, since you control it.
How different return rates compare
| Annual return | Typical of | 20-year value ($10k + $300/mo) |
|---|---|---|
| 2% | High-yield savings, short bonds | $103,000 |
| 4% | Bond-heavy portfolio | $132,000 |
| 6% | Balanced 60/40 portfolio | $171,000 |
| 8% | Diversified equity portfolio | $226,000 |
| 10% | Long-run US large-cap average (nominal) | $300,000 |
Higher expected return always comes with higher volatility. A portfolio that averages 8% may lose 30% in a single year along the way; the calculator's smooth curve hides that.
Lump sum vs regular contributions
If you already have a large sum, investing it at once has historically beaten spreading it out (“dollar-cost averaging”) about two-thirds of the time, simply because markets rise more often than they fall. Dollar-cost averaging still has a place: it reduces the regret of investing right before a drop and matches how most people actually receive income — monthly. The calculator supports both by letting you set a lump sum, a contribution, or both.
Things the projection ignores
- Taxes. Dividends, interest and realised gains in a taxable account are taxed annually or on sale. Use a tax-sheltered account where possible, or reduce your assumed return by 1–2 points to approximate the drag.
- Fees. Fund expense ratios and platform charges come straight out of returns. A 0.1% index fund vs a 1.0% active fund is a difference of roughly $30,000 on the example above.
- Inflation. $226,000 in 20 years buys what about $125,000 buys today at 3% inflation. Enter a real return (nominal minus inflation) to see purchasing power instead.
- Behaviour. The maths assumes you never stop contributing and never sell in a downturn. Investor returns lag fund returns mostly for that reason.