Investment Growth Calculator
Project the future value of an investment with an initial lump sum and optional monthly contributions. Uses compound interest to show how money grows over time.
Future value after 20 years
$343,778
$130,000
Total contributed
$213,778
Interest earned
Growth milestones
How compound interest works
Compound interest means you earn returns not just on your original investment, but on the accumulated returns as well. Over long periods, this creates exponential growth rather than linear growth.
For a lump sum investment, the future value formula is: FV = P × (1 + r)â¿, where P is the principal, r is the annual return rate, and n is the number of years. For regular contributions, the formula extends to include an annuity component.
The practical implication: starting early matters more than investing larger amounts later. £10,000 invested at age 25 at 8% annual return grows to about £217,000 by age 65. The same amount invested at 45 grows to only about £46,000.
What annual return should I use?
Common benchmarks for long-term return assumptions:
- 6–7% — conservative long-term real (inflation-adjusted) return for a diversified global equity portfolio
- 8–10% — nominal (pre-inflation) historical average for the US stock market (S&P 500)
- 3–4% — typical long-term return for bonds or balanced portfolios
- 2–5% — property, depending on location and leverage
Past returns do not guarantee future performance. Use conservative estimates for financial planning.
Frequently asked questions
Does this account for inflation?
No. This calculator shows nominal (not inflation-adjusted) returns. To estimate real purchasing power, subtract the expected inflation rate from your return. If you expect 8% nominal returns and 3% inflation, use 5% as a conservative real return estimate.
Does this account for taxes on investment gains?
No. Tax treatment depends on your jurisdiction, account type (ISA, 401k, taxable brokerage), and holding period. Tax-advantaged accounts like ISAs and 401ks allow growth without annual tax on dividends or capital gains, so the compounding is uninterrupted.
How does compounding frequency affect results?
This calculator assumes annual compounding. Monthly compounding produces slightly higher returns (about 0.5–1% difference over 20 years at typical rates). Most investment platforms compound dividends and returns continuously or monthly, so actual results may be marginally higher than shown.
