Investment Calculator – Future Value
Calculate future value of investments with regular contributions and compound interest.
The Power of Compound Interest
Compound interest is earning returns not just on your original investment but also on all previously accumulated gains. Albert Einstein allegedly called it the eighth wonder of the world — and the math backs that up.
$10,000 invested at 8% annual return: after 10 years = $21,589; after 20 years = $46,610; after 30 years = $100,627. The same money tripled in the second decade and then doubled again in the third — that acceleration is compounding at work.
Regular Contributions: The Real Multiplier
Adding regular contributions amplifies compounding dramatically. If you invest $10,000 upfront and add $500/month at 8% annual return over 30 years, you contribute a total of $190,000 but end up with $745,000 — $555,000 is pure investment returns.
Starting early matters more than investing large amounts later. Someone who invests $200/month from age 25 to 35 (10 years, $24,000 total) and then stops, will likely outperform someone who invests $200/month from age 35 to 65 (30 years, $72,000 total), thanks to the extra decade of compounding.
Expected Returns by Asset Class
Historical average annual returns (inflation-adjusted): US stocks (S&P 500): ~7%; Global stocks: ~5–6%; Bonds: ~2–3%; Real estate: ~4–5%; Cash/savings: ~0–1%.
These are long-term averages — any single year can vary wildly. Diversification across asset classes smooths volatility over time. For long investment horizons (15+ years), stocks have historically been the best-performing asset class.
Frequently Asked Questions
What is a realistic expected return?
For a diversified stock portfolio, 6–8% annual return (inflation-adjusted) is a commonly used long-term assumption based on historical data. Individual years can be +30% or -40%. The longer your horizon, the more reliable this average becomes.
How often does compounding happen?
Most investment accounts compound annually, but some compound quarterly or monthly. More frequent compounding means slightly higher returns. For long-term projections the difference is small, but it adds up over decades.
Is it better to invest a lump sum or contribute regularly?
Studies show lump-sum investing (putting all money in immediately) outperforms dollar-cost averaging about 2/3 of the time, simply because markets trend upward over time. However, regular contributions work best for most people who are building wealth gradually from income.