Watch Your Money Work: The Power of Investment Growth
Investing is the only way to grow wealth passively. While a savings account protects your money, investing multiplies it. Whether you are funding a Roth IRA, contributing to a 401(k), or building a taxable brokerage account, time is your greatest asset. Our Investment Growth Calculator visualizes the future value of your portfolio, showing you exactly how much of your wealth comes from your own pocket versus how much comes from the "magic" of Compound Interest.
The Three Pillars of Growth
Your financial future depends on three levers. This calculator lets you adjust all of them to find your path:
- Capital (Starting Amount): The money you have right now.
- Contribution (Monthly Deposit): The fuel for the fire. Even small amounts like $50/month can grow into six figures over long periods due to Dollar Cost Averaging.
- Time (Years): The most critical factor. Investing $500/month for 30 years yields significantly more than investing $1,000/month for 15 years.
Realistic Return Rates: What Should You Enter?
Forecasting is tricky, but here are historical benchmarks to guide your inputs:
- High-Yield Savings / CDs: 3% - 5% (Low risk, steady growth).
- Bonds / Conservative Funds: 4% - 6% (Moderate risk).
- Stock Market (S&P 500): 7% - 10% (Higher risk, highest long-term rewards). Note: The historical average is ~10%, but many investors use 7% to account for inflation.
Compounding Frequency Explained
The frequency setting determines how often interest is calculated and added back to your balance.
- Annually: Common for standard ROI estimates.
- Monthly: Most realistic for stock dividends and savings accounts.
- Daily: Used for some high-yield banking products. The more frequent the compounding, the slightly higher the final number.
Frequently Asked Questions
What is the difference between Total Contribution and Total Interest?
Total Contribution is the actual cash you took out of your paycheck and put into the account. Total Interest is the "free money" your money earned. In a long-term strategy (20+ years), your Interest should eventually be larger than your Contributions.
Does this account for taxes?
No. This calculates Gross Return. If you are investing in a standard brokerage account, you will eventually owe Capital Gains Tax (usually 15-20%) on the profit. If you are using a Roth IRA, this result is tax-free.
Is investing risky?
All investing carries risk. While the stock market has historically gone up over 10-year periods, it fluctuates wildly in the short term. Never invest money you need for rent or bills next month.