How it works
Building a portfolio is rarely a single-deposit event. Most investors start with a lump sum they already have saved, then keep adding money every month from their paycheck. This calculator mirrors that exact pattern: it takes your current balance, layers in a fixed monthly contribution, and projects both forward at a compound annual return rate you choose. The result is a single end balance that reflects the combined growth of your starting capital and every contribution you make along the way.
Unlike a pure lump-sum projection, the monthly contributions each have a different time in the market. Your first deposit compounds for the full duration; your final deposit barely compounds at all. The calculator handles this by treating the starting amount as one future-value calculation and the contribution stream as a separate growing annuity, then summing them.
The formula
End Balance = P × (1 + r/12)^(12t) + PMT × [((1 + r/12)^(12t) − 1) / (r/12)]
Where P is the starting amount, PMT is the monthly contribution, r is the annual return rate as a decimal, and t is the number of years. The first term grows your initial principal with monthly compounding. The second term accumulates every monthly contribution, each earning compound returns from the moment it is deposited.
Worked example
A common, broadly applicable scenario: you open a generic brokerage account with no starting balance, contribute $500 every month, and model a long-run market return of 7% per year over 30 years.
- Starting amount (P): $0
- Monthly contribution (PMT): $500
- Annual return rate (r): 7% → 0.07
- Years (t): 30
Because the starting amount is zero, the entire end balance comes from the contribution term. The monthly rate is 0.07 ÷ 12 = 0.005833. The total number of compounding periods is 12 × 30 = 360.
Calculate the growth factor:
- (1 + 0.005833)^360 = (1.005833)^360 ≈ 8.116
Apply the annuity accumulation formula:
- 8.116 − 1 = 7.116
- 7.116 ÷ 0.005833 ≈ 1,220.06
- $500 × 1,220.06 ≈ $610,030
| Component | Value |
|---|---|
| Total contributions ($500 × 360 months) | $180,000 |
| Investment growth | $430,030 |
| Ending balance | ≈ $610,030 |
Roughly 71% of the final balance is growth, not money you deposited. That ratio is what decades of compounding does to steady, unremarkable contributions.
If you had started with $10,000 already in the account, that portion alone would grow to about $81,160 at the same rate over 30 years, pushing the total near $691,000.
Things to watch
The return rate you enter drives the outcome more than any other input. A 1-point difference — 6% instead of 7% — drops the ending balance from $610,000 to about $502,000 in this scenario. That sensitivity is why long-run averages are more defensible than recent bull-market returns for multi-decade projections.
Real portfolios don't return a smooth 7% every year. They swing 20% up one year and 15% down the next. The calculator's linear compounding is a planning estimate, not a prediction of the path. Sequence risk — the order of returns — matters most when you're withdrawing money, but even during accumulation, a few bad early years can meaningfully change the trajectory.
This tool produces an estimate, not professional advice. It doesn't model taxes on dividends or capital gains, fund expense ratios, inflation, or changes in your contribution amount over time. For a full financial plan, consult a licensed advisor.
One more practical point: the calculator assumes contributions happen at the end of each month (ordinary annuity convention). If you invest on the first of every month, your real balance will be slightly higher because each deposit has an extra month of compounding.