This calculator estimates investment growth. It's a tool for illustration and not a guarantee of future results.
Estimated Future Value
$0.00
Understanding Investment Growth with the Fidelity Investments Calculator
Investing is a cornerstone of building long-term wealth. Understanding how your investments can grow over time is crucial for making informed financial decisions. The Fidelity Investments Growth Calculator is designed to help you visualize this potential growth by simulating the compounding effect of your investments.
How the Calculator Works: The Power of Compounding
This calculator utilizes a compound interest formula to project the future value of your investments. Compounding is the process where your investment earnings begin to generate their own earnings over time. It's often referred to as "interest on interest" and is a powerful engine for wealth accumulation.
The core formula used is a variation of the future value of an annuity, adjusted for the initial investment and compounding growth:
FV = P(1 + r)^n + C * [((1 + r)^n - 1) / r]
Where:
FV = Future Value of the investment
P = Principal (Initial Investment)
r = Annual interest rate (Expected Annual Return / 100)
n = Number of years (Investment Horizon)
C = Annual Contributions
The first part of the formula, P(1 + r)^n, calculates the growth of your initial lump sum investment. The second part, C * [((1 + r)^n - 1) / r], calculates the future value of your series of annual contributions, also benefiting from compounding.
Key Inputs Explained:
Initial Investment ($): The starting amount of money you invest today. This lump sum is the foundation for your investment's growth.
Annual Contributions ($): The amount of money you plan to add to your investment each year. Consistent contributions significantly boost your long-term returns through dollar-cost averaging and increased compounding.
Expected Annual Return (%): The average rate of return you anticipate your investment will yield each year. This is an estimate, and actual market returns can vary widely. It's important to be realistic and consider historical averages for the asset classes you're investing in.
Investment Horizon (Years): The total period you plan to keep your money invested. Longer time horizons generally allow for greater compounding and can help smooth out market volatility.
Why Use This Calculator?
Financial Planning: Estimate potential savings for retirement, education, or other long-term goals.
Goal Setting: Understand how much you might need to save regularly to reach a specific financial target.
Investment Strategy: Compare how different rates of return or contribution amounts could impact your future wealth.
Motivation: Seeing the potential long-term benefits of consistent saving and investing can be a powerful motivator.
Important Considerations:
The results from this calculator are estimates. Actual investment returns are not guaranteed and can fluctuate due to market conditions, economic factors, and the specific investment choices made. Taxes and investment fees are not factored into this basic calculation and can significantly impact your net returns. Always consult with a qualified financial advisor for personalized advice.
function calculateGrowth() {
var initialInvestment = parseFloat(document.getElementById("initialInvestment").value);
var annualContributions = parseFloat(document.getElementById("annualContributions").value);
var expectedAnnualReturn = parseFloat(document.getElementById("expectedAnnualReturn").value);
var investmentYears = parseInt(document.getElementById("investmentYears").value);
var resultValueElement = document.getElementById("result-value");
// Input validation
if (isNaN(initialInvestment) || initialInvestment < 0 ||
isNaN(annualContributions) || annualContributions < 0 ||
isNaN(expectedAnnualReturn) || expectedAnnualReturn 100 ||
isNaN(investmentYears) || investmentYears 0) {
futureValue = initialInvestment * Math.pow((1 + rate), investmentYears) +
annualContributions * (Math.pow((1 + rate), investmentYears) – 1) / rate;
} else { // Handle zero interest rate scenario
futureValue = initialInvestment + (annualContributions * investmentYears);
}
// Format the result as currency
resultValueElement.textContent = "$" + futureValue.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,');
}