Investment Return Calculator
Forecast the future value of your portfolio. Calculate capital growth over time under set compounding rates with optional regular monthly or yearly contributions.
Enter parameters on the left to calculate future value.
Understanding Compound Growth with Contributions
The Investment Return Calculator projects the growth of an initial capital pool (lump sum) compounded over time, combined with regular, periodic capital additions. By compound growth, the returns earned in each period are reinvested to earn even more returns in subsequent periods, creating a parabolic compounding growth curve.
The Mathematical Formulas
To calculate future value geometrically, we split the projection into two parts:
1. Future Value of the Initial Lump Sum:
2. Future Value of Periodic Additions (Annuity):
Where:
- P = Initial investment balance (Lump sum).
- PMT = Periodic contribution amount.
- r = Expected annual return rate (as a decimal).
- rp = Periodic return rate (e.g. rp = (1 + r)1/12 – 1 for monthly schedules).
- n = Duration in years.
- t = Total number of periods (e.g. 12 × n for monthly contributions).
Worked Example
Scenario: Growth Fund over 5 Years
- Initial Balance: $10,000
- Monthly Contribution: $100
- Expected Annual Return: 8%
* **Invested Principal:** $10,000 + ($100 × 12 × 5) = $16,000.
* **Compounded Future Value:** $21,796.86.
* **Net Investment Returns:** $5,796.86.