Investment & Wealth Tools
Investment Calculator
Project portfolio growth with annual contributions, expected returns, and inflation adjustment.
Investment Details
Initial portfolio principal
Total added each year
Expected annual return rate
Number of years invested
Estimated annual inflation
Final Value
Projected$0
Insights
How Investment Growth Works
Investing is the process of allocating capital to assets with the expectation of generating income or profit over time. When combined with compounding, regular annual contributions allow your money to multiply significantly across decades.
Your total portfolio value at any given point is driven by three primary inputs: your starting principal, your annual contribution rate, and your annualized expected return. As time passes, the portion of your portfolio growth generated by investment returns eclipses your personal contributions.
Nominal vs Real Returns
When evaluating long-term investments, distinguishing between nominal and real returns is vital. Nominal returns represent the raw portfolio balance without adjusting for rising prices. Real returns factor in inflation, revealing the true purchasing power of your future wealth in today's dollars.
Frequently asked questions
What return should I expect from the stock market?
Historically, the broad U.S. stock market (such as the S&P 500) has delivered an average annual nominal return of roughly 9% to 10% before inflation. Adjusted for inflation, real returns typically average around 6% to 7% per year over long horizons.
What is the difference between nominal and real return?
Nominal return is the raw percentage or dollar growth of your portfolio without accounting for inflation. Real return adjusts that growth for inflation, reflecting your actual purchasing power and what your future money will realistically buy.
How much should I invest each year?
Financial advisors often recommend saving and investing 15% to 20% of your gross annual income for long-term goals like retirement. Setting up consistent annual or monthly contributions automates your wealth building and harnesses dollar-cost averaging.
Does inflation affect my investment returns?
Yes. Inflation steadily erodes the purchasing power of money over time. If your portfolio returns 7% annually while inflation runs at 3%, your real purchasing power increases by roughly 4% per year, not 7%.
How does compound growth work over 30 years?
Over long periods like 30 years, compound growth accelerates dramatically because your earnings generate their own earnings. In many long-term portfolios, total investment growth eventually surpasses the total amount of money you personally contributed.