How to Use an Investment Calculator

When it comes to investing, visualizing your asset allocation and future investing potential is critical for success.  

All too often, people sell their investments instead of sitting back and letting time do the trick. Remember: investing is all about the long-term. If you’re operating purely for short-term gains, you’re bound to lose more than you win.

One of the best things you can do to predict long-term gains is to use an investment calculator. Keep reading to learn what an investment calculator is and why it should be one of the tools in your personal finance kit. 

What is an investment calculator?

An investment calculator is a financial tool that lets you see what the approximate value of a lump sum of money will be a number of years down the road. 

Investors use calculators to play around with different metrics and determine investing strategies depending on interest rate. By using a calculator, it’s possible to see what will happen if you add more or less or use a different rate of returns. Without a calculator, it’s difficult to understand how compound interest will impact your returns. If you need a refresher, check this post about the value of compound interest.

Here’s a breakdown of what you can expect to find in an investment calculator.

Starting amount 

The starting amount refers to the initial investment amount.

For example, you may want to see what a $500 investment will look like in 10 years. Or, you may start with $5,000. Experiment with different starting amounts to see what various initial investments could potentially produce over time.

Annual rate of return 

The rate of return is the rate at which your investment will increase. 

The rate of return can vary from investment to investment. For example, the stock market produces an average return of 10% annually. Real estate can run from 8% to 10%. 


An investment term is the number of years of potential growth. The calculator should allow you to adjust the term length in intervals of months and years. 

Try toggling the year amounts to see how the numbers move around. And remember: Experienced investors frequently look at long time horizons of 20 years or more. 

That’s not to say you shouldn’t invest for short to medium-term growth with brokerage accounts. But the longer you keep your money in a tax-friendly retirement fund, the better you’ll be in the long run.


Most investors don’t invest a lump sum and leave the investment alone. Instead, they keep adding small amounts to grow and nurture their initial investment as they earn more money. 

The calculator should let you contribute on a weekly, biweekly, monthly, semi-annual, and annual basis. 

Higher frequency contributions can yield dramatic returns. For example, suppose you start with a $5,000 investment and make an annual contribution of $100 with a rate of return of 10%. In 10 years, that would yield $14,562. 

If you take that same starting amount of $5,000 and make a biweekly contribution of $100, the 10-year return jumps to $58,105. And if you can swing a $100 weekly cash infusion in 10 years, you’ll have $102,793.

If you make a $100 contribution per week with a 10% return, in 30 years, you’ll be a millionaire with $1,089,582.

Expected value

The expected value is the estimated investment amount at the end of the term. It’s the product of all the variables mentioned above that you put into the calculator.

How to use an investment calculator 

Using an investment calculator isn’t difficult. Use these steps to start your calculations. 

1. Find the right tool 

There are many investment calculators on the internet, with varying styles and formulas. Poke around and find a tool with a sleek design that’s easy to use and understand. 

Chances are, if the tool you’re using is confusing, there’s an easy one just a few clicks away. View our list of top calculators.

2. Form a budget 

The next thing you’ll want to do is form a budget, which can help you see how much you can realistically afford to invest each month on assets like mutual funds, exchange-traded funds (ETFs), stocks, bonds, and index funds.

3. Plug in data

Start plugging in numbers and running calculations. It’s a good idea to jot down some information as you do so you can have an easy reference point when moving money around. 

Tips for using an investment calculator 

Here are some tips to consider when using an investment calculator.

Remember that rates can change 

As a disclaimer, rates are never set in stone. For example, just because the stock market produces 10% per year on average doesn’t mean it’s going to every year. 

Investing can be risky because the stock market is volatile. The amount you see in the expected total is not going to be the actual dollar amount. It’s just an estimate, meant to help you visualize a long-term investment return.

Be honest with yourself

It’s one thing to say you want to contribute $100 or more per week to an account. It’s another thing to actually go ahead and do it. 

Be realistic about how much you can set aside in your investment accounts

PRO TIP:To reach your investment goals, you may need to pick up a side hustle or two.

Start investing

Oftentimes, people will use tools like investing calculators, form a strategy, and then close their internet browser and avoid taking the first step. 

Stop delaying investing and get to work. Every day your money isn’t in the market is an investing day you’re ultimately wasting. You can always recover from financial loss, but you can’t get time back—and time is the most important element in investing. 

The benefits of using an investment calculator

Start thinking ahead 

Using a financial calculator can help you shift your mindset and start thinking long-term. 

All too often, people wait to start investing. As a result, they reach their golden years without having enough in the bank. 

The last thing you want is to be in a situation where you are fully reliant on Social Security payments when you retire because these most likely won’t cover your monthly expenses. 

By using a financial calculator now, you can see that it is truly possible to amass wealth. It takes dedication and years of work, but it’s possible. 

Visualize financial freedom

As you look ahead and visualize the future, you can see what your investments actually produce more clearly.

For example, you may envision retiring early someday. A financial calculator can help you see if your current strategy is aligned with reality. 

Compare different investments 

Investors often struggle to understand whether they should put money into vehicles like real estate or the stock market. 

A financial calculator can help you see what different types of returns can produce over time. It can make it easier to achieve smart asset allocation, which is important for success.

Of course, a healthy portfolio should combine several different assets with varying rates of return. Putting all your eggs in one basket is rarely the best strategy. 

Frequently Asked Questions

Should I use a financial advisor?

If you are just starting out with investing or you have gotten off track, using a financial advisor is not a bad call. The main problem with a financial advisor is that the individual will charge you to manage your money or provide advice. 

Many of my readers have learned from doing their own research and by reading up on the top personal finance books, which is what I recommend if you have the time.

How can I predict the future value of an investment?

The best way to predict the future value of your investment is to use a financial calculator to see what a specific investment is likely to get you. 

Remember that financial calculators only offer estimates. And on top of that, it can be downright impossible to predict the price of a stock accurately. If this were possible, there would be a lot more billionaires in the world.

The Bottom Line

When investing, the more data you have at your disposal, the better off you’ll be. 

Financial calculators can help investors understand their investment options and potential outcomes. They can also help you figure out your retirement plans and shed light on the amount of money you should have in your retirement savings so that you can retire comfortably.  

For example, you may be looking at an investment plan such as an IRA or an annuity and want to see the long-term gains you could potentially make. An interest calculator can help with this task. 

Also, remember that not all financial calculators are accurate; they are only estimates. It’s up to you to do the hard work of earning and investing that money, month after month, year after year, so that it grows to over seven figures when you retire.  

Here’s to finding the tools that help you build a successful future.

Leave a Reply

Your email address will not be published.