This calculator helps you estimate the potential future value of your stock investments based on your initial investment, regular contributions, the number of years you plan to invest, and an expected average annual growth rate. Stock market investments historically offer higher returns than traditional savings accounts but also come with greater risk and volatility.
How the Calculation Works:
The calculator uses a compound growth formula that accounts for both the initial lump sum and ongoing contributions. The core idea is that your investment grows not only from new money added but also from the earnings generated on previous earnings.
The formula can be broken down into two main parts:
Future Value of Initial Investment: This is calculated using the compound interest formula:
FV = P * (1 + r)^n Where:
P = Principal amount (Initial Investment)
r = Annual growth rate (as a decimal, e.g., 7% = 0.07)
n = Number of years
Future Value of Annual Contributions: This part estimates the future value of an ordinary annuity (a series of equal payments made at regular intervals). The formula is:
FV_annuity = C * [ ((1 + r)^n - 1) / r ] Where:
C = Annual Contribution amount
r = Annual growth rate (as a decimal)
n = Number of years
Note: If the growth rate 'r' is 0, the future value of contributions is simply C * n.
Total Future Value = Future Value of Initial Investment + Future Value of Annual Contributions
Factors to Consider:
Expected Growth Rate: This is an estimate. Historical stock market returns are often cited, but past performance is not indicative of future results. Actual returns can vary significantly year to year.
Inflation: The calculated future value is in nominal terms. The purchasing power of that money in the future will be reduced by inflation.
Taxes and Fees: This calculation does not account for taxes on capital gains or dividends, nor for brokerage fees or fund management expenses, which will reduce your net returns.
Risk Tolerance: Higher expected growth rates usually correlate with higher risk. Ensure your investment strategy aligns with your comfort level for potential losses.
Use Cases:
Retirement Planning: Estimate how much your savings could grow over decades for retirement.
Goal Setting: Determine if your investment plan is on track to meet future financial goals (e.g., down payment for a house, funding education).
Investment Strategy Evaluation: Compare the potential outcomes of different investment amounts, time horizons, and expected growth rates.
function calculateInvestment() {
var initialInvestment = parseFloat(document.getElementById("initialInvestment").value);
var annualContributions = parseFloat(document.getElementById("annualContributions").value);
var investmentYears = parseInt(document.getElementById("investmentYears").value);
var annualGrowthRate = parseFloat(document.getElementById("annualGrowthRate").value) / 100; // Convert percentage to decimal
var resultElement = document.getElementById("result");
resultElement.innerHTML = "; // Clear previous results
// Input validation
if (isNaN(initialInvestment) || isNaN(annualContributions) || isNaN(investmentYears) || isNaN(annualGrowthRate) ||
initialInvestment < 0 || annualContributions < 0 || investmentYears <= 0) {
resultElement.innerHTML = 'Please enter valid positive numbers for all fields, with at least 1 year.';
return;
}
var futureValueOfInitial = 0;
var futureValueOfContributions = 0;
var totalFutureValue = 0;
// Calculate future value of initial investment
futureValueOfInitial = initialInvestment * Math.pow((1 + annualGrowthRate), investmentYears);
// Calculate future value of annual contributions (annuity)
if (annualGrowthRate === 0) {
futureValueOfContributions = annualContributions * investmentYears;
} else {
futureValueOfContributions = annualContributions * ((Math.pow((1 + annualGrowthRate), investmentYears) – 1) / annualGrowthRate);
}
totalFutureValue = futureValueOfInitial + futureValueOfContributions;
// Display results
resultElement.innerHTML = '$' + totalFutureValue.toFixed(2) +
'Estimated total value after ' + investmentYears + ' years';
}