What compounding means
When gains remain invested, future gains or losses apply to a changing balance. Regular deposits add another source of growth. Over long periods, small changes in assumptions can produce very different endpoints. A smooth curve describes the calculation; it does not describe how markets move.
Separate what you contribute from what you assume
Start with your balance, an affordable monthly contribution and a time horizon. Then compare several hypothetical returns, including zero or a negative scenario. Changing your contribution describes a budget decision. Increasing a return input describes an assumption, and cannot make that return available.
Keep nominal and real dollars separate
A future balance is measured in the dollars of that future year. To illustrate purchasing power today, divide it by the cumulative inflation factor once. If you already used an inflation-adjusted return, deducting inflation again understates the result. Our calculators use nominal return inputs and show purchasing power separately.
Use the result as a planning tool
The calculator adds fixed contributions at month-end and converts an effective annual return to an equivalent monthly rate. It excludes tax and assumes you enter a return after fees. Vary the inputs, note which assumptions matter most, and review your plan when the underlying facts change.
Put the idea into numbers
Further reading
SEC: Compound interest calculator
General education with a U.S. context. Illustrations are hypothetical. Account, tax and legal rules depend on your circumstances and location.