Year by year
$10,000.00 to start, adding $200.00 a month, at 7% a year.
| Year | Added | Growth | Balance |
|---|---|---|---|
| 1 | $2,400.00 | $776.06 | $13,176.06 |
| 2 | $2,400.00 | $998.38 | $16,574.44 |
| 3 | $2,400.00 | $1,236.27 | $20,210.71 |
| 4 | $2,400.00 | $1,490.81 | $24,101.52 |
| 5 | $2,400.00 | $1,763.17 | $28,264.69 |
| 6 | $2,400.00 | $2,054.59 | $32,719.28 |
| 7 | $2,400.00 | $2,366.41 | $37,485.69 |
| 8 | $2,400.00 | $2,700.06 | $42,585.74 |
| 9 | $2,400.00 | $3,057.06 | $48,042.80 |
| 10 | $2,400.00 | $3,439.06 | $53,881.86 |
| 11 | $2,400.00 | $3,847.79 | $60,129.65 |
| 12 | $2,400.00 | $4,285.13 | $66,814.78 |
| 13 | $2,400.00 | $4,753.09 | $73,967.88 |
| 14 | $2,400.00 | $5,253.81 | $81,621.69 |
| 15 | $2,400.00 | $5,789.58 | $89,811.27 |
| 16 | $2,400.00 | $6,362.85 | $98,574.12 |
| 17 | $2,400.00 | $6,976.25 | $107,950.36 |
| 18 | $2,400.00 | $7,632.58 | $117,982.95 |
| 19 | $2,400.00 | $8,334.87 | $128,717.81 |
| 20 | $2,400.00 | $9,086.31 | $140,204.12 |
The Added and Growth columns are for that one year; periods longer than 30 years show every fifth year. Early on, most of the balance is money you put in. Later the growth column overtakes the deposits, because it is earned on everything that came before.
Results are estimates for planning. They are not financial, tax or legal advice.
The future value formula
A balance with regular deposits is two sums added together: what the starting amount grows to, and what the stream of deposits grows to.
- P is the starting amount and C is the amount added each period. For withdrawals, C is negative.
- i is the return for one period and N is the number of periods: 240 for monthly deposits over 20 years.
- If money goes in at the start of each period instead of the end, the second part is multiplied by (1 + i).
The rate for one period has to grow to the yearly figure you entered. With a 7% return compounded yearly and monthly deposits, the monthly rate is 1.07^(1/12) − 1 = 0.565415%, not 7 ÷ 12. Twelve months at 0.565415% compound to exactly 7%.
Worked examples
$10,000 plus $200 a month for 20 years at 7%
The starting $10,000 grows to 10,000 × 1.07^20 = $38,696.84. The 240 deposits of $200 come to $48,000 paid in and grow to $101,507.28. Together that is $140,204.12, of which $82,204.12 is growth.
Starting from nothing: $500 a month for 10 years
At 6% compounded monthly, the monthly rate is 0.5% and there are 120 deposits. 500 × (1.005^120 − 1) ÷ 0.005 = $81,939.67. You paid in $60,000, so $21,939.67 is growth.
Taking money out: $1,000 a month from $200,000
Choose "Take out monthly". At a 5% return, ten years of withdrawals remove $120,000, yet the balance only falls to $171,415.76, because the money still invested earned $91,415.76 over that time. Raise the withdrawal and the balance falls faster; push it far enough and the calculator shows when it reaches zero.
What moves the result most
| Change to the first example | Balance after 20 years |
|---|---|
| As entered: 7%, compounded yearly, end of month | $140,204.12 |
| Deposits at the start of each month | $140,778.06 |
| Return compounded monthly | $144,572.72 |
| Return of 6% (a 1% yearly fee) | $122,759.08 |
| Return of 9% | $183,814.45 |
The timing of deposits barely matters. The return matters a great deal, and it is the one input nobody can know in advance. Past returns do not promise future ones, and real markets rise and fall from year to year instead of growing at one steady rate.
What this calculator leaves out
- Ups and downs. The same return is applied every period. A real investment could be well above or below this line in any given year.
- Fees and taxes. Enter the return after fees. Taxes depend on the account and on your own situation.
- Inflation. Results are in future dollars unless you enter a return with inflation taken off.
- Rounding by your provider. Nothing is rounded to cents along the way, so a statement may differ by a few cents.
Questions people ask
What return should I use?
Nobody knows what an investment will return, so try more than one figure. With $10,000 and $200 a month for 20 years, 5% gives $107,693.87, 7% gives $140,204.12 and 9% gives $183,814.45. Plan around the lower figure and treat the higher one as a bonus.
What does “return compounds” change?
“Yearly” treats your figure as the growth over a full year: 7% turns $100 into exactly $107 in twelve months. “Monthly” divides the rate by 12 and compounds it each month, which comes to 7.229% over a year. Many bank and loan calculators work the monthly way, so pick it if you are checking against one of those.
Does it matter if I pay in at the start or the end of the month?
A little. Money paid in at the start of each month earns one extra month of growth. In the $200-a-month example it adds $573.94 over 20 years: $140,778.06 instead of $140,204.12.
How do I allow for inflation?
Use a return with inflation taken off. The exact figure is (1 + return) ÷ (1 + inflation) − 1, so a 7% return with 2.5% inflation is a real return of 4.39%. Enter 4.39 as the return and the answer is in today’s dollars, as long as your deposits also rise with inflation.
Are fees and taxes included?
No. Take yearly fees off the return before you enter it: a fund that returns 7% and charges 1% a year should be entered as 6%. In the example that lowers the result from $140,204.12 to $122,759.08. Taxes depend on the kind of account and are not estimated here.
What happens if my withdrawals use up the money?
The balance stops at zero and the calculator tells you how many full withdrawals were paid. To study that question on its own, with withdrawals that rise each year, use the how long will my money last calculator.