Investment Calculator

Project a portfolio, or work back to the figure that gets you there.

Index funds now hold the majority of American equity assets, so most investors own the market rather than pick within it, and the difference between a 0.03% and a 1% expense ratio compounds into a wide gap over decades. Dividends have supplied a substantial share of long-run total return.

Total return is what an investor actually keeps: price appreciation plus dividends, minus fees, and broad US equity indexes have historically returned near 10% a year before inflation over long stretches. Fees compound against you, so a 1% annual charge removes roughly a quarter of a 30-year return.

Market performance is measured on total return — price change plus dividends — and the long-run figure usually quoted for a broad US stock index is near 10% a year before inflation, closer to 7% after it. That average hides steep drawdowns, and the order in which returns arrive matters as much as the average once money is being added or withdrawn.

Bond prices move inversely to yields.

A projection at a steady average return flatters a real portfolio, which rarely returns the same number twice: a run of poor years early on does lasting damage to a plan built on withdrawals.

Bond prices fall when yields rise, and a fund's stated yield is not a promise — it moves with the portfolio behind it. Concentration is the quieter risk: a handful of very large American companies now account for an outsized share of index return.

Investment Calculator sits with the rest of the library's finance work, and it rests on the same portfolio arithmetic the way a lender's disclosure or a bank statement does. Its answer is only as good as the assumptions standing behind it.

The quantities it works from — work out, starting amount, additional contribution, return rate and investment length — are the ones a real portfolio question actually turns on, and each carries a convention of its own, set out below.

Money questions in America turn on the same few trade-offs: how long a balance is carried, what rate applies to it, and whether the money is being paid down or built up. Inflation sits behind all of them, since a figure that looks generous at today's prices buys less at tomorrow's, and comparisons across decades are made in real, inflation-adjusted terms.

American products also disclose their costs in prescribed ways, from the APR on a consumer loan to the annual percentage yield on a deposit account.