Investment Growth Calculator
Investing is essential for building long-term wealth and achieving financial goals like retirement. This calculator projects investment growth based on initial investment, regular contributions, time period, and expected returns. The stock market has historically returned about 10% annually, though returns vary significantly year-to-year. Conservative planning uses 7-9% to account for inflation and volatility.
Time is the most powerful factor in investing due to compound returns. $1,000 monthly invested for 25 years at 9% grows to over $1 million, with only $300,000 contributed. The $700,000+ difference is compound growth. Starting 10 years later requires contributing $2,500 monthly to reach the same endpoint, demonstrating the extraordinary advantage of early investing.
Diversification across stocks, bonds, and other assets reduces risk while maintaining growth potential. Index funds and ETFs provide instant diversification at low cost. Dollar-cost averaging (investing regularly regardless of market conditions) reduces timing risk and builds discipline. Tax-advantaged accounts like 401(k)s and IRAs maximize returns by deferring or eliminating taxes on gains.
Quick Tips
- Always compare APR, not just interest rates
- Use the Rule of 72 to estimate doubling time
- Extra payments dramatically reduce total interest
Frequently Asked Questions
The S&P 500 has averaged about 10% annually since 1926. Conservative planning uses 7-8% after inflation. Diversified portfolios typically target 6-9% depending on stock/bond allocation. Past performance doesn't guarantee future results.
Yes - market downturns are buying opportunities. Dollar-cost averaging means you buy more shares when prices are low. Historically, markets always recover, and staying invested through downturns is crucial for long-term success.
Financial advisors typically recommend 15-20% of gross income for retirement, including employer matches. Start with what you can afford and increase annually with raises. Even $100 monthly grows substantially over decades.
Contribute to 401(k) up to employer match first (free money), then max Roth IRA ($7,000 in 2024), then back to 401(k) up to limit ($23,000 in 2024). Both offer tax advantages - 401(k) is pre-tax, Roth is after-tax but grows tax-free.
Pay off high-interest debt (credit cards, payday loans) first. Get employer 401(k) match. Then decide based on debt interest rate vs. investment returns. Debt over 7-8% warrants payoff; lower rates allow simultaneous investing and debt payoff.