Investment Return Calculator
Project the future value of an investment with regular monthly contributions, a target annual return, and optional dividend reinvestment. Use it to model long-term wealth building from a starting balance and a recurring deposit.
Last updated: May 2026
About this calculator
This calculator projects the future value (FV) of a recurring investment using the standard FV-of-annuity-due formula with monthly compounding. The total annual rate is the expected annual return plus, optionally, the annual dividend yield when 'Reinvest Dividends' is set to Yes; the simple additive convention r_total = r + d is used (the cross term r·d is small enough to ignore at typical equity/dividend rates). That rate is divided by 12 to get a monthly rate r_m, the investment period is converted to n = years × 12 months, and the lump-sum starting balance compounds for n months alongside the monthly contribution stream: FV = initialInvestment × (1 + r_m)ⁿ + monthlyContribution × [(1 + r_m)ⁿ − 1] / r_m × (1 + r_m). The trailing (1 + r_m) is the annuity-due multiplier, treating contributions as paid at the start of each month (paychecks-into-brokerage timing); switch to ordinary annuity by dropping it if your platform deposits contributions at month-end instead. The formula does NOT compute CAGR — for that, use (finalValue / startingValue)^(1/years) − 1 after running this projection.
How to use
Start with $10,000, add $500 per month, expect 8.5% annual return + 2.5% dividend yield (reinvested), invest for 20 years. Step 1 — Total annual rate (with reinvestment) = 8.5% + 2.5% = 11% = 0.11. Step 2 — Monthly rate r_m = 0.11 / 12 ≈ 0.009167; total periods n = 20 × 12 = 240. Step 3 — Compound factor (1 + r_m)ⁿ = 1.009167²⁴⁰ ≈ 8.937. Step 4 — FV of starting balance = $10,000 × 8.935 ≈ $89,352. Step 5 — FV of monthly contributions (annuity due, deposits at start of each month) = $500 × (8.935 − 1) / 0.009167 × 1.009167 ≈ $500 × 873.57 ≈ $436,785. Step 6 — Total Investment Value ≈ $89,352 + $436,785 ≈ $526,137. Switching reinvestment Off (using only the 8.5% appreciation rate) drops the result to roughly $370,133 — confirming that the ~$156,000 difference comes purely from reinvested dividends compounding over two decades.
Frequently asked questions
What is the difference between CAGR and average annual return?
CAGR (Compound Annual Growth Rate) measures the single constant rate that would take your investment from start to finish, accounting for compounding. Average annual return simply averages yearly percentage gains and can overstate performance when returns fluctuate. For example, a +50% year followed by a −50% year gives an average return of 0% but an actual loss of 25%. CAGR correctly shows a negative result in that scenario, making it the more accurate measure of real investment growth.
How do I interpret a negative investment return from this calculator?
A negative CAGR means your investment lost value over the period — the final value is less than the initial investment. For instance, investing $5,000 that shrinks to $3,500 over 4 years yields a CAGR of about −8.5% per year. This is useful for assessing how badly a position underperformed. Comparing the negative CAGR to a benchmark like the S&P 500 over the same period helps you understand the true opportunity cost of holding that asset.
When should I use annualized return instead of total return?
Use annualized return (CAGR) whenever you want to compare investments held for different lengths of time on a level playing field. Total return simply shows the overall percentage gain regardless of duration, so a 100% total return over 20 years is far less impressive than the same gain over 3 years. Annualized return normalizes for time, making it the preferred metric for fund performance reports, retirement planning, and side-by-side asset comparisons. Use total return when you only care about the absolute outcome of a single, fixed-duration investment.