Example
Investing $10,000 today and $500 a month at an 8% annual return grows to about $343,800 after 20 years. You put in $130,000; the other $213,800 is growth. At 3% inflation, that is worth about $190,000 in today's dollars.
The three levers
- Time: starting 10 years earlier often matters more than investing more later.
- Amount: regular contributions build the base that compounding works on.
- Return: a few percentage points a year makes a huge difference over decades, which is why low fees matter.
Keep expectations realistic
Real markets do not grow in a straight line. Some years fall sharply, others jump. A steady average return is a helpful planning tool, but the actual path will be bumpier, and the final number could be higher or lower. Diversifying and investing for the long term helps smooth out the ride.
Planning for retirement specifically? Use the retirement calculator. To measure past performance, try the CAGR calculator.
Last reviewed October 2026.
Frequently asked questions
How does an investment grow over time?
Returns earn returns of their own, which is called compounding. In the early years most of your balance is money you put in. Over decades, growth can become far larger than your contributions, as the chart shows.
What rate of return should I use?
It depends on what you invest in. Broad US stock indexes have averaged roughly 10% a year before inflation over the long run, but with big swings and no guarantees. Bonds and savings have returned less. Many planners use 6% to 8% for a balanced long-term estimate.
Should I adjust for inflation?
Turn on the inflation option to see the result in today's dollars. At 3% inflation, $100,000 in 20 years buys about what $55,000 buys today.
Does contributing at the start of the month matter?
A little. Money added at the start of each period has one extra period to grow. Over many years, the difference adds up to roughly one period's worth of extra growth on every deposit.
Does this include taxes and fees?
No. Fund fees and taxes on dividends or gains reduce real-world returns. A simple way to account for fees is to lower the return by your fund's expense ratio.