Investment Returns Calculator
Predicting returns on investment is a difficult process. To get an accurate picture, it's not enough to merely assume a given rate of return; you need to take into account other factors like inflation and taxes to determine what your investment will be worth in real terms a number of years down the road. This Investment Returns Calculator allows you to do just that. In addition to figuring your rate of return over time, this calculator also lets you see how such factors as the economic climate, taxes and additional investments over time will affect your investment. You can also easily vary each of these to see how changes in one or several factors will affect your investments over time, and view results for simple vs. compounded interest.
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Investment returns Inputs:
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Annual Investment Returns
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The number of years you wish to analyze. This can be any number from one to one hundred.
Rate of return
This is the annually compounded rate of return you expect from your investments before taxes. The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31st 2018, had an annual compounded rate of return of 12.1%, including reinvestment of dividends. From January 1, 1970 to December 31st 2018, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 10.2% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a financial institution may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.
It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that investment funds and/or investment companies may charge.
Total you currently have invested that should be included in this analysis.
The amount you will contribute to your investments each period. If you check the box to adjust this amount for inflation, your annual investment will increase each year by the inflation rate.
Frequency of contributions
How often you make contributions to your account. The options include weekly, bi-weekly, monthly, quarterly and annually. This calculator assumes that you make your contributions at the beginning of each period.
This is what you expect for the average long-term inflation rate. A common measure of inflation in the U.S. is the Consumer Price Index (CPI). From 1925 through 2018 the CPI has a long-term average of 2.9% annually. Over the last 40 years highest CPI recorded was 13.5% in 1980. For 2018, the last full year available, the CPI was 2.2% annually as reported by the Minneapolis Federal Reserve.
The percentage of your investment return you will pay in taxes. Your taxes are assumed to be payable annually, at the end of the year.
Check this box to increase your future investment amounts for inflation.
Show values after inflation
Check this box to show all totals after inflation. By choosing this option you will see the value of your investments in terms of purchasing power, if you had that amount available today.
Interest on an investment's interest, plus previous interest. The more frequently this occurs, the sooner your accumulated interest will generate additional interest. You should check with your financial institution to find out how often interest is being compounded on your particular investment.
Compounded interest return
Total after-tax return if your investment profit is compounded annually.
Simple interest return
Total after-tax return if your investment profit is simple interest with no compounding.
Total invested capital
Total you have invested. This includes your initial investment and all periodic investments.
Investment final total
Your investment's total ending value. If you have checked the box to show values after inflation, this amount is the total value of your investment in today's dollars. If this box is unchecked, it will show the actual value of the investment.
Annual rate of return is the amount that you earn on an investment fund for an entire year. It is also referred to as the annual percentage rate and should not be confused for calculations that are done over a period of many years.
The annual rate of return is calculated using the fund’s value at the start and the end of the year. The difference between both amounts (representing the total money gained or lost) is divided by the investment amount at the start of the year. You can use our investment calculator to calculate your annual rate of return.
An investment rate of return calculator is used to calculate the gain (or loss) made from an investment over a particular period of time. An investment rate of return calculator works by finding the net difference between the initial value of the investment and its final value and then dividing it by the investment cost.
The average return rate represents the average cash flow generated over the life of an investment. To make an average rate of return calculation, add all the cash flows that are expected over the period of the investment and then divide by the number of years the investment is expected to run for.
If you invest $100,000 at an annual interest rate of 6%, at the end of 20 years, your initial investment will amount to a total of $320,714, putting your interest earned over the two decades at $220,714.
This represents the actual financial return that you get from your investment after it has been adjusted for the impacts of inflation and taxes. The after-tax rate of return is on the opposite end of the nominal rate of return, which only factors in gross returns.
The after-tax rate of return calculator takes the gross investment rate of return and then deducts the percentages of inflation and taxes over the period of the investment.
A personal rate of return calculator makes use of your cash flow activity to provide an estimate of your investment’s performance. The money that is deposited and withdrawn from your investment account over a period of time is what is categorized as cash flow, and the personal rate of return calculator estimates its impact on your actual rate of return.
Yes, there are. But before you go on to invest in any of these mutual funds, it is important that you seek professional advice from an investment pro. There are simply so many options for you to select from, and you cannot tell which ones will suit you by merely looking at them.
Mutual fund calculators help you estimate your returns from investments in mutual funds. To use a mutual fund annual return calculator, all you have to do is, input the investment amount, the rate of return, and the investment’s term. The calculator will show you how much your investment will have appreciated by the end of the specified term.
About Returns on Investment
Investing is a complicated process. You need to understand how the various investment products work, what their risk level is and what style of investing you are comfortable with. You also need to take into consideration taxes, inflation, fees and the health of the economy. If you aren't familiar with investing, or with factoring in elements that can impact the rate of return an investment will produce, then you should try our Investment Returns Tool.
What can you do with this calculator?
The Investment Returns Calculator can serve a number of investment purposes. For example:
- Predicting how your investments might perform over time
- Gauging risk vs. reward in comparing two different investments with different rates of return
- Retirement planning and working out what sort of nest egg you might have
- Looking at how the rate of inflation might affect your investments
- Assessing how investing additional amounts over time will affect your overall returns
- Figuring the impact of different income tax rates on your investment performance
- Calculating the effects of simple vs. compounding interest
Using the Investment Returns Calculator
To use this tool you will need to enter the number of years you plan to hold onto an investment product, the expected rate of return, your initial investment amount, your annual investment amount, the current inflation rate and your current tax rate for investments. After entering these amounts click on "calculate." This will produce a graph. If you want a detailed view of your investment scenario you will need to click on the "view report" button.
Here is additional information that may be useful when using the calculator:
- Rate of return: This is the annually compounded rate of return for your investments. For the 10 years ending in December 2015, the S&P 500 annual rate of return was 7.76 percent, including the reinvestment of dividends. From 1970 through 2015, the average rate was 10.5 percent, ranging from a 12-month high of 61 percent (June 1982-83) and a low of -43 percent (March 2008-09). These figures should only be used in generating estimates; future performance cannot be reliably predicted from past trends.
- Annual investment: The additional amount you plan to invest each year, on top of your original investment.
- Expected inflation rate: Enter the average rate of inflation you expect to occur during your investment. From 1925 through 2015, the average rate of inflation was 2.9 percent, based on the Consumer Price Index.
- Tax rate: Enter your total tax rate based on income, federal, state, local, etc.
As you enter your information, the calculator will automatically determine the total value of your investment at the end of the time specified and display it in the blue bar at the top. Changing any of those values, such as by moving the green triangles, will immediately change your investment totals as well.
Clicking "Show report" will switch to a new page showing a more detailed breakdown of the investment and it's performance.
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