How to use the investment calculator
The calculator opens with an example: $10,000 invested today, $500 added every month, a 7% yearly return before fees, 1% in annual fees, for 25 years. Replace the numbers with your own.
- Starting amount and monthly contribution. Enter what you invest now and what you will add each month. Either can be zero, but not both.
- Expected annual return, before fees. This is the average yearly growth you assume for the investments, including reinvested dividends. For a stock index fund, many people test something between 5% and 8%.
- Annual fees. Add the fund’s expense ratio (on its factsheet) and any advisory or platform fee charged as a percentage of assets. A 0.05% index fund held through a 1% advisor is 1.05%.
- Years invested and inflation. The number of whole years until you need the money, and the inflation rate used to convert the result into today’s dollars.
The chart draws three paths: your expected return, and the same plan at two points lower and two points higher. The grey dashed line is the money you put in; everything above it is growth. The table shows each year’s balance next to what it would be with no fees.
How the projection is calculated
Fees are a percentage of the balance, so the calculator takes them off the return each year, then compounds monthly with contributions at the end of each month:
Monthly rate i = (1 + rn)1/12 − 1
FV = S × (1 + i)12t + C × [(1 + i)12t − 1] ÷ ir is the expected annual return, f the annual fee, S the starting amount, C the monthly contribution and t the number of years. With r = 7% and f = 1%, the net return is 5.93%, slightly less than 7% − 1%.
The other results follow from the same projection:
Value in today's money = FV ÷ (1 + inflation)tThe cost of fees includes the growth the fees would have earned if they had stayed invested, which is why it is far larger than the fees paid in any one year.
A worked example
You invest $10,000 now and $500 a month for 25 years, expecting 7% a year from a stock fund and paying 1% a year in fees.
After fees, the investments earn 5.93% a year. You contribute $160,000.00 in total, and the account grows to $376,943.08, so $216,943.08 is investment growth.
With no fees, the same plan would reach $445,795.27. The 1% fee costs $68,852.18, 15.4% of the no-fee result.
At 2.5% inflation, the final balance buys roughly what $203,319.55 buys today. In real terms the plan earns 3.35% a year.
If returns come in two points lower, at 5%, the account ends at $279,001.18; two points higher, at 9%, it reaches $515,462.78.
Fees: the input you control
You cannot choose your returns, but you can choose what you pay. Keeping everything else in the example the same:
| Annual fees | Final value | Cost of fees over 25 years |
|---|---|---|
| 0.1% (broad index fund) | $438,313.30 | $7,481.97 |
| 0.5% | $409,753.85 | $36,041.41 |
| 1% (example) | $376,943.08 | $68,852.18 |
| 2% (fund plus advisor) | $319,852.82 | $125,942.45 |
A fee looks small next to a 7% return, but it is charged on the whole balance every year, including the growth of past years. At 2% the fees take 28.3% of what the account would otherwise hold. Paying for advice can still be worth it if it keeps you invested or improves your plan; the table shows the bar the advice has to clear.
Time and contributions
Time does the heavy lifting in any projection. With the example’s monthly contributions:
| Years invested | Contributions | Final value | Growth |
|---|---|---|---|
| 15 | $100,000.00 | $166,379.03 | $66,379.03 |
| 25 | $160,000.00 | $376,943.08 | $216,943.08 |
| 35 | $220,000.00 | $751,548.41 | $531,548.41 |
The growth earned in the last ten years of the 35-year plan is larger than all the growth of the first 25 years, because each year’s return is earned on a larger balance. Raising the monthly contribution to $750 takes the 25-year result to $544,306.76; investing only the starting $10,000 with no monthly additions gives $42,215.73. For most people, steady contributions and staying invested matter more than any fine-tuning of the expected return.
Reading the three lines
The pessimistic, expected and optimistic lines are what-if rates two percentage points apart. They are not probabilities, and the real outcome is not guaranteed to fall between them. Actual stock returns vary a lot from year to year: a portfolio that averages 7% might gain 25% one year and lose 15% the next, and a weak decade can happen. The order of returns also matters once you are adding or withdrawing money, which a constant-rate projection cannot show.
Use the range to stress-test a plan. If your goal only works on the optimistic line, it depends on good luck; if it still works on the pessimistic line, it has a margin for error. For a view that includes year-to-year swings, a Monte Carlo simulation is the next step.
What this calculator does not include
- Taxes. Gains and dividends in a taxable account are taxed, which lowers the effective return. Tax-advantaged accounts such as a 401(k) or IRA in the US defer or remove that drag; our retirement and 401(k) calculators cover them.
- Changing contributions. Contributions stay level. In practice many people raise them as their income grows.
- Variable returns and sequence risk. The projection uses the same return every year.
- Trading costs and cash drag inside a fund, which are not always in the expense ratio.
Treat the result as what your stated assumptions produce, and revisit them as your plan and the markets change.