Investment Calculator
Calculate the future value of a lump-sum investment with fixed annual returns. Visualize exponential growth and analyze historical asset performance.
About
Accurate financial projection requires a distinct separation between linear savings and exponential investment growth. This tool computes the future value (FV) of a singular capital injection based on a fixed annual rate of return over a defined time horizon. Unlike simple savings accounts, investment vehicles typically compound returns, meaning the earnings generate their own earnings. This distinction is critical for long-term planning, where the compounding effect can exceed the initial principal magnitude.
Investors use this calculation to benchmark potential asset classes against inflation or target financial milestones. A clear understanding of the Time Value of Money (TVM) allows for realistic expectation setting regarding risk and reward. The visualization provided in this tool demonstrates the non-linear trajectory of wealth accumulation, emphasizing the impact of time in the equation.
Formulas
The core calculation utilizes the standard compound interest formula for a single lump sum:
Where:
- FV is the Future Value.
- P is the Principal (initial investment).
- r is the annual interest rate (decimal).
- t is the time horizon in years.
Reference Data
| Asset Class | Avg. Annual Return (30y) | Std. Deviation (Risk) | Real Return (Adj. Inflation) |
|---|---|---|---|
| S&P 500 (Large Cap) | 10.7% | 15.5% | 7.5% |
| US Treasury Bonds (10y) | 5.1% | 4.9% | 2.2% |
| Corporate Bonds (Inv. Grade) | 6.1% | 6.8% | 3.1% |
| Gold (Spot) | 5.4% | 16.2% | 2.4% |
| Real Estate (REITs) | 9.8% | 18.4% | 6.6% |
| Emerging Markets | 8.9% | 22.1% | 5.7% |
| Small Cap Equities | 11.8% | 19.6% | 8.6% |
| Cash / T-Bills | 3.3% | 0.9% | 0.4% |
| Global Equities (ex-US) | 6.8% | 14.8% | 3.9% |
| High Yield Bonds | 7.2% | 9.3% | 4.2% |