Purpose and steps
Convert the annual return to an effective monthly rate, grow the opening balance each month, then add the month-end contribution. Divide the final balance by cumulative inflation for today-dollar value. The calculation runs locally and keeps cash-flow timing consistent with the stated assumptions.
- Confirm currency and monthly versus annual amounts. U.S. tax and loan models should be used within their stated scope.
- Prepare Initial investment, Monthly contribution, Expected annual return, Investment period, Annual inflation. Defaults demonstrate the model rather than your personal circumstances.
- Check the headline result and its components. A key interpretation for this tool is: Nominal gain is the ending balance minus cash contributed.
- Compare the baseline with a changed scenario: The inflation-adjusted value estimates purchasing power, not an after-tax liquidation value.
Input reference and units
These values reproduce the model’s demonstration. Replace them with your own records or measurements; they are not recommended targets.
On a small screen, swipe the table horizontally to see all columns.
| Parameter | Demonstration value | How to enter it |
|---|---|---|
| Initial investment | 10000 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Monthly contribution | 300 USD | Use dollars and the monthly or annual period stated in the field label; do not enter thousands of dollars. |
| Expected annual return | 8 % | A scenario assumption, not a promised investment yield; also test a lower return. |
| Investment period | 20 years | Use years here. The model converts to months when the payment schedule requires it. |
| Annual inflation | 3 % | Enter a percentage such as 6.5, not 0.065. The equation converts it to a decimal. |
Model-specific method
How this calculator produces its result
Convert the annual return to an effective monthly rate, grow the opening balance each month, then add the month-end contribution. Divide the final balance by cumulative inflation for today-dollar value.
Geometric growth and a stream of contributions
Compound growth multiplies the previous balance, including earlier interest, by the next period’s growth factor. The contribution term is another geometric sum: the first deposit compounds for longer than the last. It applies only to equal deposits and a constant rate; growing contributions require a different sum or period-by-period simulation.
A nominal rate compounded m times per year has effective annual growth (1+j/m)^m−1. An already effective annual return converts to a monthly rate as (1+g)^(1/12)−1. These are different conventions, so use the one specified by the tool. A constant return model says nothing about volatility or sequence-of-returns risk.
FV = P(1+r)^n FV of end-period deposits = C × ((1+r)^n − 1)/r Beginning-period deposits multiply the deposit term by (1+r)
- P: initial amount
- C: equal contribution per period
- r: growth rate for that period
- n: periods, with contributions and growth on the same schedule
Worked example
$10,000 initially plus $300 at each month-end contributes $82,000 over 20 years. The projected balance depends on the entered return, while the real value also depends on inflation.
Reproduce the default scenario
This is a separate example, calculated using the exact engine on the tool page and the defaults in the input reference above. Health examples use metric units. Displayed rounding may differ from intermediate precision.
- Projected investment value
- 217,309.29 USD
- Total contributions
- 82,000 USD
- Nominal investment gain
- 135,309.29 USD
- Inflation-adjusted value
- 120,318.89 USD
- Inflation-adjusted gain over contributions
- 38,318.89 USD
- Effective monthly return
- 0.64%
Reading results without overstating them
- Nominal gain is the ending balance minus cash contributed.
- The inflation-adjusted value estimates purchasing power, not an after-tax liquidation value.
Assumptions and exclusions
- Assumes a constant return, constant inflation, and month-end contributions with no volatility, fees, taxes, withdrawals, or contribution changes. Investment returns are not guaranteed.
Sources and content notes
Toolify describes the implemented algorithm and its assumptions. Sources below support the topic or applicable rules; they do not endorse this calculator. Examples are illustrative, and published rules take precedence over simplified estimates.
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