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.
Wondering what kind of mortgage rate you could get on a home loan or refinance? Use the "Get Free Quote" button at the top to get personalized rate quotes from mortgage lenders.