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Investment Calculator — Investment Growth & Returns Calculator

Calculate investment growth with compound interest and regular contributions

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Investment Calculator: Portfolio Growth Analysis for 2026

Market Performance: The 2025 Backdrop

The S&P 500 delivered its third consecutive year of double-digit returns in 2025, gaining 17.9% including dividends. This remarkable streak—three years averaging over 20% annually—has occurred only five times in 97 years of market history. Understanding historical returns contextualises expectations for future growth projections.

Current market data (February 2026):

| Index/Asset | 2025 Return | 3-Year Total Return | 2026 Forecast | |-------------|-------------|---------------------|---------------| | S&P 500 | +17.9% | +100.6% | +12% (Goldman Sachs) | | FTSE 100 | +21.0% | Best since 2009 | +10% (JP Morgan) | | Nasdaq Composite | +29.8% | Tech-led gains | Varies by analyst | | Bitcoin | -6.0% | +121% (2023-2025 combined) | Highly variable | | Magnificent Seven (avg) | +27.5% | Dominated US returns | AI-dependent |

Sources: Macrotrends, CNBC, Visual Capitalist

Past performance does not guarantee future results—yet historical data provides the foundation for reasonable return assumptions in investment planning.

Contents

Calculator Guide

The Starting Balance field accepts the current portfolio value. This may be zero for new investors or the present value of existing investments.

Monthly Contribution represents regular investment amounts. Consistency in contributions typically matters more than timing. The current average US worker contributes 7.7% of salary to retirement accounts, with total contributions (including employer matching) averaging 12%.

Expected Annual Return should reflect realistic assumptions. Historical S&P 500 returns average 9.3% annually (1950-2024), though individual years vary dramatically. Conservative projections employ 6-7%; aggressive projections may use 8-10%.

Investment Period represents the time horizon in years. Longer periods allow greater tolerance for volatility and higher equity allocations.

Compounding Frequency is typically monthly for most investment accounts. More frequent compounding produces marginally higher returns.

Inflation Rate adjusts projections to real purchasing power. Historical US inflation averages approximately 3%; recent years have demonstrated inflation can surprise in either direction.

Results display:

  • Nominal future value
  • Inflation-adjusted (real) future value
  • Total contributions versus investment earnings
  • Return on investment percentage
  • Year-by-year balance progression

The Mathematics of Compound Growth

Investment growth combines compound returns on existing balances with regular contributions that each begin compounding upon deposit.

Future Value Formula (with contributions):

FV = P(1 + r)^t + PMT × [(1 + r)^t - 1] / r

Where:

  • P = Initial investment (principal)
  • PMT = Periodic contribution
  • r = Periodic interest rate
  • t = Number of periods

Example Calculation:

Initial Investment: £10,000 Monthly Contribution: £500 Annual Return: 7% Time Horizon: 30 years

Lump Sum Growth: £10,000 × (1.07)^30 = £76,123

Contribution Growth: Monthly rate = 0.07/12 = 0.00583 Months = 360 £500 × [(1.00583)^360 - 1] / 0.00583 = £566,764

Total Future Value: £642,887

Total Contributions: £10,000 + (£500 × 360) = £190,000

Investment Earnings: £642,887 - £190,000 = £452,887

The £190,000 in contributions grew by £452,887—a 238% return on invested capital. Time and compounding produced more than double the original investment in pure earnings.

Historical Return Analysis

S&P 500: 97 Years of Data

The S&P 500's historical performance provides context for return assumptions:

| Return Range | Frequency | Historical Occurrence | |--------------|-----------|----------------------| | Above 40% | 2% | Exceptional (1933, 1954, 1958) | | 20-40% | 18% | Strong bull markets | | 10-20% | Most common | Median range | | 0-10% | 22% | Modest positive years | | -10% to 0% | 12% | Minor corrections | | Below -10% | 13% | Bear markets |

Approximately two-thirds of years produce positive returns. The most common outcome is 10-20% annual gain.

Recent Performance Context

The 2025 S&P 500 return of 17.9% was driven primarily by earnings growth (13.5 percentage points) rather than multiple expansion (2.5 percentage points). This earnings-led growth is considered more sustainable than valuation-driven rallies.

Historical patterns following 10-20% years suggest median returns of 11.8% the following year, with 70% probability of positive performance.

FTSE 100: Outperformance in 2025

The FTSE 100 gained 21% in 2025—its strongest year since 2009, outperforming the S&P 500 for the first time in years. Several factors contributed:

  • Lower technology exposure (3.5% vs S&P's 33%) provided stability during tech volatility
  • Mining sector benefited from AI infrastructure demand (copper, precious metals)
  • Reduced tariff tensions benefited internationally-exposed companies
  • Attractive valuations (Buffett indicator: 119% vs US 219%)

UK dividend yields approaching 3.5% significantly exceed the S&P 500's 1.14%—its lowest level on record.

Real Investment Scenarios with 2026 Data

Scenario 1: 30-Year Retirement Portfolio

Starting at age 35, retiring at 65, using historical average returns:

Conservative Scenario (6% annual return):

  • Starting Balance: $50,000
  • Monthly Contribution: $500
  • Future Value: $873,432
  • Inflation-Adjusted (2.5%): $415,206
  • Total Contributions: $230,000
  • Investment Earnings: $643,432

Moderate Scenario (7% annual return):

  • Future Value: $1,028,572
  • Inflation-Adjusted: $488,907
  • Investment Earnings: $798,572

Aggressive Scenario (8% annual return):

  • Future Value: $1,217,811
  • Inflation-Adjusted: $578,776
  • Investment Earnings: $987,811

The difference between 6% and 8% returns over 30 years exceeds $344,000—demonstrating the profound impact of return assumptions.

Scenario 2: Current Average 401(k) Holder

Based on Fidelity's Q3 2025 data, the average 401(k) balance reached $144,400:

Age 45, Balance $144,400, Retiring at 67:

  • Monthly Contribution: $2,042 (maxing out 2026 limit of $24,500)
  • Expected Return: 7%
  • Future Value: $1,847,234
  • Inflation-Adjusted (2.5%): $1,137,912
  • Projected Annual Income (4% rule): $45,517

This projection assumes consistent maximum contributions and no employer matching. With typical 4% employer match, results improve substantially.

Scenario 3: UK ISA Investor

The UK Individual Savings Account (ISA) allows £20,000 annual tax-free investment:

Maximising ISA Allowance:

  • Annual Contribution: £20,000 (£1,667/month)
  • Starting Balance: £0
  • Time Horizon: 25 years
  • Expected Return: 7% (FTSE-based)
  • Future Value: £1,143,875
  • Tax Savings: All gains exempt from Capital Gains Tax

The ISA structure makes pound-for-pound contributions more valuable than taxable investments, where 20% (basic rate) to 24% (higher rate) CGT would apply.

AI and Technology Investments

Magnificent Seven Performance

The Magnificent Seven (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, Tesla) dominated US market returns:

| Stock | 2025 Return | 2-Year Return | Key Driver | |-------|-------------|---------------|------------| | Alphabet | +65.4% | AI/TPU chips | Search + Cloud AI | | Nvidia | +38.9% | +1,190% since 2023 | 86% AI chip market share | | Meta | +28% | Social media AI | Advertising efficiency | | Microsoft | +22% | Azure AI integration | Enterprise AI adoption | | Apple | +15% | Services growth | AI integration in devices | | Amazon | +8% | AWS AI services | Cloud infrastructure | | Tesla | +5% | EV competition | Autonomous driving development |

Source: Motley Fool

AI Investment Considerations

Nvidia's 86% market share in AI chips positions it centrally in the AI infrastructure buildout. However, concentration risk exists—the company faces challenges including China export restrictions and emerging competition from AMD and custom chips (Google TPUs, Amazon Trainium).

Beyond the Magnificent Seven, AI beneficiaries in 2025 included:

  • Broadcom: +49% (TPU manufacturing)
  • Micron: +239% (AI memory demand)
  • Credo Technology: +114% (data centre connectivity)

Portfolio Allocation Considerations

Concentrated AI exposure amplifies both gains and losses. The S&P 500's technology weighting (~33%) provides substantial AI exposure through diversified index funds. Direct AI stock investment offers higher potential returns with correspondingly higher risk.

Cryptocurrency in Portfolio Allocation

2025 Performance Review

Bitcoin's 2025 performance disappointed expectations:

| Asset | 2025 Return | Peak-to-Trough | Year-End Price | |-------|-------------|----------------|----------------| | Bitcoin | -6% | -30% (from $126k peak) | ~$88,000 | | Ethereum | -11% | Significant drawdown | Variable | | Solana | -34% | Sharp decline | Variable | | Median Altcoin | -79% | Severe losses | Variable |

Source: Morningstar

Historical Context

Bitcoin has been the top-performing asset in 10 of 13 years since 2012, yet 2025 marked its fourth negative year in that period. Following negative years, Bitcoin historically rebounds substantially:

  • 2022: -65%
  • 2023: +156%
  • 2024: +119%
  • 2025: -6%

Some analysts project $200,000+ targets for 2026, though such predictions carry substantial uncertainty.

Allocation Guidance

Research suggests adding Bitcoin to portfolios at small allocations (1-5%) has historically improved risk-adjusted returns over any three-year period, provided regular rebalancing occurs. However:

  • Volatility remains extreme
  • Regulatory uncertainty persists
  • No intrinsic cash flows for valuation
  • Median altcoin losses of 79% in 2025 demonstrate sector risk

Conservative investors may prefer zero cryptocurrency allocation; risk-tolerant investors might allocate 1-5% with understanding of potential total loss.

UK Investing: ISAs and FTSE Performance

FTSE 100 Valuation Advantage

The FTSE 100 trades at more attractive valuations than US counterparts:

| Metric | FTSE 100 | S&P 500 | |--------|----------|---------| | Buffett Indicator | 118.8% | 219.4% | | Dividend Yield | ~3.5% | 1.14% (record low) | | P/E Ratio | Lower | Elevated | | Tech Exposure | 3.5% | ~33% |

Analysts forecast 14% FTSE profit growth in 2026, with dividend growth and buybacks potentially boosting total returns further.

ISA Investment Framework

The UK ISA provides tax-efficient investing:

2025-2026 ISA Allowance: £20,000 annually

Example: 20-Year ISA Strategy

  • Annual Contribution: £20,000
  • Monthly Equivalent: £1,667
  • Expected Return: 7%
  • Future Value: £877,126
  • Tax Saved (vs taxable at 20% CGT): ~£87,713

SIPP Pension Investing

Self-Invested Personal Pensions (SIPPs) offer additional tax relief:

Higher-Rate Taxpayer Example:

  • £10,000 contribution costs £6,000 after 40% tax relief
  • Growing at 7% for 25 years: £54,274
  • Effective return on £6,000 outlay: 804%

The combination of ISA and SIPP maximises tax-efficient investing for UK residents.

Retirement Savings Benchmarks

Average 401(k) Balances by Age (2025)

Fidelity and Vanguard data reveals current savings levels:

| Age Range | Average Balance | Median Balance | Fidelity Benchmark | |-----------|-----------------|----------------|-------------------| | 20-29 | $16,499 | $7,351 | 1× salary by 30 | | 30-39 | $55,749 | $21,752 | 3× salary by 40 | | 40-49 | $125,837 | $42,345 | 6× salary by 50 | | 50-59 | $207,874 | $62,843 | 8× salary by 60 | | 60-69 | $239,706 | $72,923 | 10× salary by 67 | | 70+ | $431,962 | $106,654 | Withdrawal phase |

Source: Empower, Fidelity

2026 Contribution Limits

401(k) limits increased for 2026:

| Category | 2025 Limit | 2026 Limit | |----------|------------|------------| | Standard Contribution | $23,500 | $24,500 | | Catch-Up (50+) | $7,500 | $8,000 | | Super Catch-Up (60-63) | — | $11,250 | | Maximum (Age 60-63) | $31,000 | $35,750 |

The new "super catch-up" provision under SECURE 2.0 allows workers aged 60-63 to contribute up to $35,750 annually—significantly accelerating late-career savings.

The 4% Rule and Target Calculation

The 4% withdrawal rule suggests safe annual withdrawals of 4% of portfolio value:

Target Portfolio = Annual Expenses × 25

| Annual Expenses | Required Portfolio | Monthly Savings (25 years, 7%) | |-----------------|-------------------|-------------------------------| | $40,000 | $1,000,000 | $1,234 | | $60,000 | $1,500,000 | $1,851 | | $80,000 | $2,000,000 | $2,468 | | $100,000 | $2,500,000 | $3,085 |

How This Calculator Works

Initial Investment Growth:

futureValueInitial = initial × (1 + r/n)^(n×t)

Contribution Growth (Future Value of Annuity):

monthlyRate = annualRate / 12
totalMonths = years × 12
futureValueContributions = monthly × [(1 + monthlyRate)^months - 1] / monthlyRate

Total Future Value:

totalFutureValue = futureValueInitial + futureValueContributions

Total Contributions:

totalContributions = initial + (monthly × totalMonths)

Investment Gains:

totalGains = totalFutureValue - totalContributions

Inflation Adjustment:

inflationAdjustedValue = totalFutureValue / (1 + inflationRate)^years

Return on Investment:

ROI = (totalGains / totalContributions) × 100

All calculations execute locally within the browser.

Sources

FAQs

What annual return assumption is appropriate for long-term planning?

For diversified equity portfolios, 7% (after inflation) or 9-10% (before inflation) reflects historical S&P 500 averages since 1950. Balanced portfolios (60/40 stocks/bonds) warrant 5-6% assumptions. Conservative planning employs lower figures; the actual outcome will vary based on market conditions during the specific investment period.

How should inflation be factored into projections?

Historical US inflation averages approximately 3%. Use 2-3% for standard projections. Always review inflation-adjusted values—a $2 million portfolio in 30 years equals roughly $1 million in current purchasing power at 2.5% inflation.

What impact do investment fees have on returns?

A 1% annual fee on a 7% return effectively reduces returns to 6%. Over 30 years, this difference compounds substantially. On a $500,000 portfolio earning 7% versus 6% over 20 years, the fee cost exceeds $200,000. Index funds with 0.03-0.10% expense ratios minimise this drag.

How did the Magnificent Seven stocks perform in 2025?

The Magnificent Seven averaged 27.5% returns in 2025. Only Alphabet (+65.4%) and Nvidia (+38.9%) outperformed the S&P 500. Nvidia has gained 1,190% since early 2023, driven by 86% market share in AI chips. Concentration in these stocks amplifies both gains and losses.

Should cryptocurrency be included in investment portfolios?

Research suggests 1-5% Bitcoin allocation has historically improved risk-adjusted returns when regularly rebalanced. However, 2025 saw median altcoin losses of 79%. Cryptocurrency remains highly volatile, speculative, and unsuitable as a core portfolio holding. Only risk-tolerant investors should consider allocation, and only amounts they can afford to lose entirely.

How do UK ISAs compare to US 401(k)s?

ISAs offer tax-free growth with £20,000 annual allowance but no employer matching or upfront tax relief. 401(k)s provide pre-tax contributions (reducing current taxable income) plus potential employer matching, but face taxes upon withdrawal. SIPPs offer the UK equivalent of 401(k) tax treatment.

What are current 401(k) contribution limits for 2026?

The standard 2026 limit is $24,500, up from $23,500 in 2025. Workers 50+ can add $8,000 catch-up contributions. The new "super catch-up" for ages 60-63 allows $11,250 additional—bringing the total maximum to $35,750 for this age group.

Why did the FTSE 100 outperform the S&P 500 in 2025?

The FTSE's low technology exposure (3.5% vs 33%) provided stability during tech volatility. Mining stocks benefited from AI infrastructure demand. Attractive valuations (lower Buffett indicator, higher dividend yields) drew investor attention. Analysts project continued relative value in UK equities.

What is the 4% rule for retirement withdrawals?

The 4% rule suggests withdrawing 4% of portfolio value annually for sustainable 30-year retirement income. To generate $50,000 annual income, target $1,250,000 portfolio ($50,000 ÷ 0.04). Recent research suggests 3.5% may be more conservative given current valuations and longer lifespans.

How does starting early affect investment outcomes?

An investor contributing £400/month from age 25-35 (£48,000 total) accumulates more by age 65 than someone contributing £400/month from 35-65 (£144,000 total) at 7% returns. The early investor's £48,000 has 40 years to compound; the late starter's larger contributions have less time. Starting early is the single most powerful investment decision.