Compound return calculator

How the calculation works

The balance is compounded at the frequency you choose, using an equivalent rate derived from the annual rate so that a monthly convention and an annual convention are explicit. Contributions are added at the end of each month and are not themselves compounded until the next period. The output splits the ending balance into money you put in and growth from the rate.

Assumptions

• The annual rate is constant, which real markets are not.
• Contributions happen every month, on time.
• Fees, taxes and inflation are not deducted unless you lower the rate yourself to approximate them.
• No year produces a loss unless you type a negative rate.

A worked example

10,000 to start, 200 a month, 5% a year, monthly compounding, 20 years. The calculator will show a final balance, total contributions of 10,000 plus 200 times 240, and a growth remainder. Change the rate to 0% and the growth remainder should be about zero, aside from rounding. That check matters more than the flattering rate.

Limitations

A higher rate produces a higher picture. It does not make the rate more likely. Do not type a rate because it matches a sales illustration. Inflation means a future balance buys less than the same number of today’s currency.

Change one input at a time if a result looks surprising. The arithmetic is only as careful as the numbers you type, and it does not know your broker’s contract size.