Watch compounding do the heavy lifting.
Start with a lump sum, add to it every month, pick how often it compounds, and see exactly how much of your final balance is money you put in versus money the market made for you.
Your plan
Contributions are spread evenly across each year and added at the same frequency your balance compounds, so the total you put in stays the same no matter which frequency you pick.
What your money is doing
Balance over time
Contributions vs growth
Return scorecard
Year-by-year projection
Balance is measured at the end of each year. Growth is everything above what you have contributed so far.
| Year | Contributed | Growth | Balance | Growth share |
|---|
Investing, explained
How Compound Interest Works
Compound interest generates earnings on both your initial principal and on all previously accumulated interest. Unlike simple interest, which calculates returns only on the original amount, compounding creates exponential growth over time. A $10,000 investment growing at 8% annually reaches approximately $21,600 after 10 years, $46,600 after 20 years, and $100,600 after 30 years, illustrating how returns accelerate dramatically in later years.
The Impact of Regular Contributions
Making consistent monthly contributions amplifies the power of compound interest significantly. Investing $300 per month at an 8% annual return accumulates roughly $178,000 over 20 years, of which only $72,000 represents your actual contributions. The remaining $106,000 comes from investment returns. Automating regular contributions also removes emotion from the investment process and ensures you invest consistently through both market highs and lows.
Investment Returns by Asset Class
Different asset classes have delivered varying historical returns over time. U.S. large-cap stocks (S&P 500) have averaged approximately 10% annually over the past century, while bonds have returned roughly 5%. Real estate investment trusts (REITs) have historically returned 8-12%, and high-yield savings accounts currently offer around 4-5% APY. A diversified portfolio blending these asset classes can balance growth potential with risk management.
Dollar-Cost Averaging Explained
Dollar-cost averaging (DCA) is the strategy of investing a fixed amount at regular intervals regardless of market conditions. When prices are high, your fixed amount buys fewer shares; when prices drop, it buys more. This approach reduces the risk of investing a large sum at a market peak and tends to lower your average cost per share over time. Studies show DCA is particularly effective for investors who might otherwise hesitate to invest during volatile markets.
Common questions
What is compound interest?
Compound interest means you earn returns on both your original investment and on the returns already earned. Over time, this creates exponential growth, often called the "eighth wonder of the world."
What rate of return should I expect?
Historical averages: stocks ~10%, bonds ~5%, savings accounts ~4%. A diversified portfolio of 80% stocks/20% bonds has historically returned about 8-9% annually before inflation.
How much difference does starting early make?
Enormous. Investing $300/month starting at age 25 at 8% returns yields ~$1.05 million by age 65. Starting at age 35 yields only ~$447,000, less than half, despite contributing only $36,000 less.
Does this account for taxes on gains?
This calculator shows pre-tax growth. In a tax-advantaged account (401k, IRA), the growth matches closely. In a taxable account, actual returns will be lower due to capital gains tax.
Estimates for planning only. A fixed annual return is an assumption, not a promise: real markets rise and fall, and this calculator shows pre-tax, pre-inflation growth. Verify every figure and consider your own risk tolerance before you invest.