Investment Goal Calculator
Calculate the fixed monthly contribution needed to reach a specific financial target, given your time horizon and expected investment return. Perfect for goal-based saving toward a down payment, education fund, or retirement milestone.
About this calculator
This calculator solves for the required monthly payment (PMT) of a future-value annuity — the series of equal monthly deposits that will compound to your target amount. The formula is: Monthly Savings = (r × FV) / ((1 + r)^n − 1), where r = Expected Annual Return / 1200 (the monthly interest rate), FV = Target Amount, and n = Time Horizon × 12 (total months). Dividing the annual rate by 1200 converts it to a monthly decimal rate. The denominator (1 + r)^n − 1 captures how much each dollar of monthly deposit grows through compounding over the full period. Higher returns or longer time horizons dramatically reduce the required monthly savings amount.
How to use
Say you want to accumulate $100,000 in 10 years with an expected annual return of 6%. First, compute r = 6 / 1200 = 0.005. Then n = 10 × 12 = 120 months. Monthly Savings = (0.005 × 100,000) / ((1.005)^120 − 1) = 500 / (1.8194 − 1) = 500 / 0.8194 ≈ $610.21. You would need to invest approximately $610 per month to reach $100,000 in 10 years at a 6% annual return.
Frequently asked questions
How does increasing the time horizon reduce monthly savings needed to reach a goal?
A longer time horizon gives each monthly deposit more time to compound, so each dollar does more of the heavy lifting for you. For example, saving toward a $100,000 goal at 6% requires about $610/month over 10 years, but only about $258/month over 20 years — less than half. This is the core argument for starting to save as early as possible: time is your most powerful financial asset. The relationship is non-linear because compounding accelerates exponentially, not linearly.
What expected return should I use when planning monthly investment contributions?
Your choice of expected return should reflect the actual asset allocation of your investment account. A 100% stock index fund portfolio might reasonably use 7–8% annually based on historical averages. A balanced stock-and-bond portfolio might use 5–6%. A conservative cash or bond-heavy portfolio might use 2–4%. It is wise to run the calculator with a conservative estimate (lower return) as well as a base-case estimate so you can see how much buffer you need if markets underperform your assumptions.
Why does this calculator assume a fixed monthly contribution rather than a lump sum?
This calculator is designed for goal-based saving where you invest a regular amount each month from your income — the most common real-world savings strategy. It uses the future value of an ordinary annuity formula, which assumes end-of-period deposits. If you already have a lump sum to invest and want to project its future value, a compound interest calculator is the appropriate tool. Combining both — a lump sum today plus monthly contributions — requires adding the future value of a single sum to the future value of the annuity.