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What a Lump Sum and Steady Contributions Actually Grow Into
Most investment questions boil down to one thing: if I put in this much now and add this much every month, what will it be worth later? The answer depends on two separate growth streams — the initial deposit compounding on its own, and every future contribution compounding for whatever time remains before the end date — added together.
The Formula
P is the initial investment, PMT is the monthly contribution, r is the monthly rate (annual rate ÷ 12 ÷ 100), and n is the number of months. The first term is the future value of the lump sum; the second is the future value of an ordinary annuity formed by the recurring contributions.
Why the Rate Assumption Matters So Much
- Retirement projections — small differences in assumed annual return compound into large differences in the final balance over 20–30 years.
- Comparing contribution strategies — deciding whether to front-load a lump sum or spread contributions monthly.
- Goal planning — working backward from a target balance to see what monthly contribution and time horizon get you there.
- Sensitivity to market assumptions — because growth compounds, a return that looks modest in year one can dominate the total by year twenty.
$10,000 Initial + $200/Month: The Rate Sensitivity
Over a 20-year horizon, the assumed annual return changes the outcome dramatically:
| Annual Return | Future Value | Total Contributed | Growth |
|---|---|---|---|
| 4% | $83,724.42 | $58,000.00 | $25,724.42 |
| 6% | $101,548.55 | $58,000.00 | $43,548.55 |
| 8% | $126,027.85 | $58,000.00 | $68,027.85 |
| 10% | $159,090.99 | $58,000.00 | $101,090.99 |
Figures assume monthly compounding and monthly contributions with no withdrawals; actual market returns vary year to year rather than compounding smoothly.
How to Use This Calculator
- Enter your Initial Investment amount.
- Enter your planned Monthly Contribution (leave at 0 for a lump-sum-only projection).
- Enter the Expected Annual Return as a percentage.
- Enter the Number of Years you plan to invest.
- Select Calculate to see the projected future value, total contributed, and total interest earned.
Related Calculations
To model a single lump sum without ongoing contributions, use the Compound Interest Calculator, or check the CAGR Calculator to measure the actual annualized growth rate of a past investment.