Assumptions
- A constant annual return, compounded monthly, with contributions at the start of each month.
- Tax is applied once to the total gain at the end. Accounts taxed annually will finish slightly lower.
- Inflation only affects the "today's money" figure, not the nominal balance.
- Inputs stay in your browser and are never stored or transmitted.
How it is calculated
- The annual return is divided by twelve, the monthly contribution is added, and the whole balance is multiplied by the monthly rate.
- A contribution increase raises the monthly amount at the start of each year.
- At the end of the term the tax rate is applied to the total gain.
- The after-tax balance is discounted by inflation to give today\'s value, alongside the multiple and the effective annual return.
Examples
Common mistakes
- Constant returns do not exist. A sequence of bad early years leaves you well below a smooth projection, even at the same average.
- Subtract fees from the return. A fund charging 1% a year should be entered as 1% less than its gross return.
- Check how your account is taxed. Annual taxation on dividends compounds differently from a single tax at the end.
FAQ
Why does compounding grow so fast?
Because the growth itself starts earning. Simple interest pays the same amount every year on the original sum, while compounding turns last year's gain into principal for the next. $10,000 at 6% compounded monthly becomes $18,194 after ten years, roughly 1.8 times the original. Time matters more than the amount, which is why starting earlier beats contributing more later.
What is the rule of 72?
Divide 72 by the annual return and you get a rough number of years for money to double. At 6% that is 72 ÷ 6 = 12 years, against an exact answer of 11.9. The shortcut is closest for returns between about 4% and 12% and drifts at higher rates. Both figures are shown so you can see how close the estimate is.
Why enter an inflation rate?
Because $100,000 in twenty years does not buy what $100,000 buys now. At 2.5% inflation, money loses about a quarter of its purchasing power over ten years, so a $100,000 balance is worth roughly $78,000 in today's terms. The "in today's money" figure shows that. Set the return equal to inflation and you can watch the nominal balance grow while the real value stays flat.
What return should I use?
For a savings account or CD, use the quoted rate. For stocks or funds nobody knows the future return, so run a conservative figure and an optimistic one and treat the answers as a range. Historical US stock returns before inflation have averaged roughly 10% a year over very long periods, but individual decades have been far worse and far better.
How is tax applied?
The rate you enter is applied once, to the total gain at the end of the period. That matches a taxable account you sell at the end. If your account is taxed every year on interest or dividends, real results come out slightly lower, because tax paid early stops compounding. Tax-advantaged accounts should use 0 while the money stays inside.
Is anything I type sent anywhere?
No. The whole calculation runs in this page and the amounts never leave your device.