Last Updated: October 2023
The VTI Calculator helps investors estimate the potential growth and annualized returns of their investment in the Vanguard Total Stock Market ETF (VTI). Whether you are planning for retirement or long-term wealth building, this tool provides precise data based on your initial capital and recurring contributions.
VTI Investment Calculator
VTI Calculator Formula
FV = P(1 + r/n)nt + PMT × [((1 + r/n)nt – 1) / (r/n)]
Source: Investopedia – Compound Interest
Variables:
- Initial Investment (P): The starting amount of money you invest in VTI.
- Monthly Contribution (PMT): The additional amount added to the investment every month.
- Investment Period (t): The total number of years you plan to hold the investment.
- Annual Return (r): The expected yearly growth rate of the VTI ETF.
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What is a VTI Calculator?
A VTI Calculator is a specialized financial tool designed for investors in the Vanguard Total Stock Market ETF (VTI). It utilizes the principles of compound interest to project future wealth based on historical or expected stock market returns. This calculator accounts for both your initial lump sum and consistent monthly contributions.
VTI covers nearly 100% of the investable U.S. stock market, including small, mid, and large-cap stocks. Using this calculator allows you to visualize how the broad market’s diversification can compound your savings over decades, making it a staple for Boglehead-style long-term investors.
How to Calculate VTI Returns (Example)
- Input your starting balance (e.g., $10,000).
- Determine your monthly contribution (e.g., $500/month).
- Select your time horizon (e.g., 20 years).
- Input the expected annual return (Historical VTI average is approx 7-10%).
- Click Calculate to see the compounding effect.
Frequently Asked Questions (FAQ)
What is the average annual return for VTI?
Historically, VTI has provided an average annual return of approximately 8% to 10% over the long term, though this fluctuates based on market conditions.
Does this calculator include dividends?
Yes, the “Expected Return Rate” typically includes both capital appreciation and reinvested dividends for a total return projection.
Why use VTI instead of individual stocks?
VTI offers instant diversification across over 3,000 companies, significantly reducing the risk associated with individual company failures.
Is VTI a good choice for retirement?
VTI is widely considered one of the best “set and forget” investments for retirement due to its low expense ratio and broad market exposure.