What the calculator does
You can model regular contributions such as a systematic investment plan (SIP). The entered fee reduces the assumed annual return, and the tax input estimates tax on positive gains at the end of the horizon. This is not a fund forecast or account-specific tax calculation.
Five variables describe a simple investment plan: the starting amount, regular contributions, the annual return, the number of years and the ending balance. Fix any four and the fifth follows. The tabs at the top pick which one to solve for; the inputs change to match. Contributions can be monthly or yearly, at the start or end of each period, and compounding is set separately (a fund quoted with an annual return but topped up monthly is the usual case).
The default plan — $20,000 to start, $500 a month, 7% a year compounded monthly — grows as shown below. Roughly half of the 30-year balance is return on return rather than money you contributed.
| Years | Balance | You contributed | Return earned |
|---|---|---|---|
| 5 | $64,149 | $50,000 | $14,149 |
| 10 | $126,736 | $80,000 | $46,736 |
| 15 | $215,460 | $110,000 | $105,460 |
| 20 | $341,238 | $140,000 | $201,238 |
| 25 | $519,544 | $170,000 | $349,544 |
| 30 | $772,315 | $200,000 | $572,315 |
| 35 | $1,130,650 | $230,000 | $900,650 |
| 40 | $1,638,635 | $260,000 | $1,378,635 |
Why the return rate matters more than anything else
Small changes in the annual return compound into very different outcomes over long periods. The table shows the same $20,000 and $500 a month under returns from 3% (a conservative bond portfolio) to 11% (an optimistic all-stock assumption). Over 30 years the gap between 5% and 9% is more than double the balance. Nobody can pick their return in advance, so run the calculator at a low and a high figure and plan for the low one.
| Annual return | 10 years | 20 years | 30 years |
|---|---|---|---|
| 3% | $96,858 | $200,566 | $340,505 |
| 5% | $110,581 | $259,770 | $505,484 |
| 7% | $126,736 | $341,238 | $772,315 |
| 9% | $145,784 | $454,126 | $1,209,983 |
| 11% | $168,282 | $611,519 | $1,936,422 |
How much to invest for $1 million
Switch to the Contribution tab to answer the question people most often bring here. Starting from nothing at 7%, the monthly amount a $1 million target needs falls steeply with time, because in a long plan most of the money comes from growth rather than deposits. Over 40 years you contribute less than a fifth of the final balance.
| Time | Monthly contribution | Total contributed |
|---|---|---|
| 10 years | $5,777.51 | $693,302 |
| 15 years | $3,154.95 | $567,891 |
| 20 years | $1,919.66 | $460,717 |
| 25 years | $1,234.46 | $370,338 |
| 30 years | $819.69 | $295,089 |
| 40 years | $380.98 | $182,870 |
The cost of starting late
The same $500 a month invested until 65 ends up in very different places depending on when it starts. Starting at 25 rather than 35 costs $60,000 more in contributions but produces about $600,000 more, because the extra decade sits at the front of the plan, where every dollar has forty years to compound.
| Start | Years investing | Contributed | Balance at 65 | Growth |
|---|---|---|---|---|
| Age 25 | 40 years | $240,000 | $1,312,407 | $1,072,407 |
| Age 35 | 30 years | $180,000 | $609,985 | $429,985 |
| Age 45 | 20 years | $120,000 | $260,463 | $140,463 |
Inflation and real returns
A balance in 2056 dollars buys less than the same figure today. The calculator deflates the ending balance by the inflation rate you enter (2.5% by default) and reports the purchasing-power equivalent alongside the nominal figure. At 2.5% inflation a dollar loses about half its value in 28 years, so a 30-year nominal balance is worth roughly half as much in today's terms. If you would rather think entirely in today's dollars, enter a real return — the nominal return minus inflation, about 4–5% for a diversified stock portfolio — and set inflation to zero.
Assumptions and limits
The return is applied evenly every period. Real markets do not do that: sequence matters, especially near the end when the balance is largest, and a bad decade can leave a plan well below the smooth-curve figure. The annual fee input is subtracted from the return (a 1% annual fee on a 7% return is a 7% → 6% change, which the rate table above shows is not small); the Mutual fund fees tab adds sales loads. The tax input is a single estimate on gains at the end: set it to 0 inside a tax-advantaged account. Contributions are assumed constant; if you expect them to rise with your income, enter today's amount for a conservative result.
- Return applied evenly each period; no volatility or sequence risk.
- Fees are a flat annual percentage taken off the return; tax is a single end-of-horizon estimate on gains. The Mutual fund fees tab models loads and the expense ratio in detail.
- Constant contributions in nominal dollars.
- Contribution timing and compounding frequency are independent settings.
Worked example: real return and today's dollars
Inflation is removed in two places. The end balance is deflated as FV ÷ (1 + inflation)^t: $1,000,000 in 30 years at 2.5% inflation is 1,000,000 ÷ 1.025^30 = 1,000,000 ÷ 2.0976 = $476,743 in today's money. The annual return is converted with the Fisher relation, real return = (1 + r) ÷ (1 + inflation) − 1: a 7% return with 2.5% inflation is 1.07 ÷ 1.025 − 1 = 4.39% real, a little less than the 4.5% that simple subtraction suggests.
The calculator applies the relation to the effective annual return after the fee assumption, (1 + i)^k − 1, and shows each step with your numbers.
Mutual fund fees: loads, expense ratio and 12b-1
The Mutual fund fees tab shows what a fund's sales charges and expenses do to an investment. The US SEC's Investor.gov defines the pieces. A front-end sales load is paid when you buy and is deducted from the purchase, so less money buys shares. The expense ratio is the percentage of assets taken each year for operating expenses, and it already includes any 12b-1 (distribution and service) fee. A back-end sales load, or contingent deferred sales charge (CDSC), is paid when you sell, usually on a schedule that falls to zero the longer you hold.
Worked example: $10,000 into a fund with a 5% front-end load, an 8% gross return, a 1% expense ratio and a CDSC of 5, 4, 3, 2, 1% for years one to five, sold after three years. $10,000 × (1 − 0.05) = $9,500 buys shares. The net return is 8% − 1% = 7%, so the holding grows to $9,500 × 1.07³ = $11,637.91 (it would be $11,967.26 with no expenses, so the expense ratio cost $329.36). The year-three charge is 3% of the $10,000 purchase, $300, leaving $11,337.91: an after-fee return of (11,337.91 ÷ 10,000)^(1/3) − 1 = 4.27% a year against 8% gross.
Each yearly contribution pays the front-end load and ages separately for the deferred charge. Funds differ in whether the CDSC is charged on the purchase amount or on the lesser of that and the current value, and in load breakpoints and waivers, so check the prospectus fee table. Real funds deduct expenses daily; treating the expense ratio as a subtraction from the annual return is a close approximation.