What is Investment Calculator?
An investment calculator models portfolio wealth accumulation over time, illustrating how steady dollar-cost averaging and compound returns turn modest monthly deposits into substantial financial independence.
How to Use This Calculator
- Enter starting lump sum.
- Specify monthly additions.
- Set your investment timeframe and expected return rate.
- Evaluate total future capital and interest gains.
The Mathematical Formula & Variables
FV = PV*(1+r)^t + PMT * [((1+r)^t - 1) / r]
Variables Definition
| Symbol / Variable | Name | Description |
|---|---|---|
FV |
Future Value | Final portfolio balance. |
PV |
Present Value | Initial investment amount. |
Step-by-Step Worked Example
Scenario: $20,000 initial + $500/month for 20 years at 7.0% annualized return.
- Lump sum growth = $20,000 * (1.07)^20 = $77,393.
- Annuity stream growth = $500/mo compounded monthly at 7% = $209,943.
- Total ending portfolio = $77,393 + $209,943 = $287,336.
Result: Portfolio reaches $287,336 from $140,000 total out-of-pocket investment.
Frequently Asked Questions
What is Dollar-Cost Averaging (DCA)?
Dollar-cost averaging is the strategy of investing a fixed dollar amount on a regular schedule, regardless of share price. This reduces market timing risk and lowers average cost per share over time.