Investing & Compound Growth Planner
Model how your money can grow over time, compare different investing strategies, and see what it takes to reach your goals.
Compound Growth Simulator
Estimate how a single investment plus ongoing contributions can grow over time with compound returns.
Results
Approximate growth over time
How investing and compound growth work
Investing is the process of putting money into assets that can grow over time—such as stocks, bonds, ETFs, mutual funds, or real estate—rather than holding everything in cash. The engine behind long‑term wealth building is compound growth: your money earns a return, those earnings are reinvested, and then they earn returns too.
Compound growth formula
Future value of a lump sum: \( FV = PV \times \left(1 + \frac{r}{n}\right)^{n \cdot t} \)
- PV = present value (initial investment)
- r = annual rate of return (decimal)
- n = compounding periods per year
- t = years invested
Future value of a stream of equal contributions: \( FV_{\text{contrib}} = P \times \frac{\left(1 + \frac{r}{n}\right)^{n \cdot t} - 1}{\frac{r}{n}} \) where P is the contribution per period.
Growth vs. income investing
Many investors think in terms of “growth” vs. “income”:
- Growth investing focuses on companies or funds expected to grow earnings quickly. Returns come mostly from price appreciation, and volatility is usually higher.
- Income investing focuses on assets that pay regular interest or dividends (bonds, dividend stocks, REITs). Returns may be steadier but often lower over the long term.
In practice, most diversified portfolios blend growth and income. Use the Strategy comparison tab to model a growth‑tilted vs. income‑tilted mix and see how different assumptions affect your long‑term outcome.
Key levers you control
- Time in the market: Starting earlier gives compounding more years to work.
- Contribution rate: How much you invest monthly or annually often matters more than squeezing out an extra 1% of return.
- Risk level / asset mix: More stocks usually mean higher expected return but larger swings; more bonds usually mean lower volatility and lower expected return.
- Costs and taxes: High fees and frequent taxable trading can quietly erode compound growth.
Using this tool to build a plan
- Use Compound growth to see how your current investing pattern might grow if you stay the course.
- Switch to Goal‑based investing and plug in a target (for example, retirement savings or a down payment) to estimate the contribution needed.
- Experiment in Strategy comparison with different return and contribution assumptions (e.g., 80% stocks vs. 50% stocks) to understand the trade‑offs.
This tool is for educational purposes only and does not provide financial, investment, tax, or legal advice. Returns are hypothetical and not guaranteed. Consider speaking with a qualified financial professional before making major decisions.
Frequently Asked Questions
What is the difference between saving and investing?
Saving usually means keeping money in very safe, liquid accounts (like savings accounts or money market funds) for short‑term needs and emergencies. Investing means buying assets that can fluctuate in value but are expected to grow more over the long term. Saving protects your capital; investing aims to grow it.
How much of my income should I invest?
Rules of thumb often suggest investing 10–20% of gross income for long‑term goals, but the “right” number depends on your age, goals, and existing savings. Use the goal‑based tab to see whether your current savings rate is on track for your target amount and timeline.
How realistic are the return assumptions?
No calculator can predict future returns. Historical long‑term returns for diversified stock portfolios have been higher than for bonds or cash, but they have also been volatile. It is wise to run multiple scenarios (conservative, base‑case, optimistic) and avoid relying on a single number.
Should I prioritize paying off debt or investing?
High‑interest debt (like credit cards) usually should be paid down before aggressive investing, because the “return” from eliminating that interest is often higher and risk‑free. For lower‑rate debts (like some mortgages or student loans), a blended approach—paying them down while also investing—can make sense.