Investment Growth Calculator Formula

Understand the math behind the investment growth calculator. Each variable explained with a worked example.

Use the Investment Growth Calculator

Formulas Used

Future Value

future_value = monthly_rate > 0 ? initial_investment * pow(1 + monthly_rate, num_months) + monthly_contribution * (pow(1 + monthly_rate, num_months) - 1) / monthly_rate : initial_investment + monthly_contribution * num_months

Total Invested

total_invested = initial_investment + monthly_contribution * num_months

Investment Gains

total_returns = future_value - total_invested

Variables

VariableDescriptionDefault
initial_investmentInitial Investment(USD)25000
monthly_contributionMonthly Contribution(USD)500
annual_returnExpected Annual Return(%)8
yearsInvestment Period(years)25
monthly_rateDerived value= annual_return / 12 / 100calculated
num_monthsDerived value= years * 12calculated

How It Works

How Investment Growth Works

Investment growth uses compound returns with regular contributions to project your portfolio value.

Formula

FV = PV(1+r)^n + PMT * [(1+r)^n - 1] / r

Where:

  • FV = Future value
  • PV = Present value (initial investment)
  • PMT = Monthly contribution
  • r = Monthly rate of return
  • n = Number of months

    • Worked Example

    You invest $25,000 and add $500/month at 8% return for 25 years.

    initial_investment = 25000monthly_contribution = 500annual_return = 8years = 25
    1. 01Monthly rate: 8% / 12 = 0.6667% (0.006667)
    2. 02Total months: 25 * 12 = 300
    3. 03Initial investment grows: $25,000 * (1.006667)^300 = $171,212.89
    4. 04Monthly contributions grow: $500 * [(1.006667)^300 - 1] / 0.006667 = $475,513.14
    5. 05Future Value = $171,212.89 + $475,513.14 = $646,726.03
    6. 06Total invested: $25,000 + ($500 * 300) = $175,000
    7. 07Investment gains: $646,726.03 - $175,000 = $471,726.03

    Ready to run the numbers?

    Open Investment Growth Calculator