How to use the investment return comparison calculator
- Enter the years to grow, which applies to both investments.
- For Investment A and Investment B, enter the starting amount, the yearly return you want to test and a monthly deposit.
- Add a yearly cost if you want to subtract fees from the return.
- Compare the ending values, how much of each is growth and the year by year table.
Formula
Net return = yearly return - yearly cost
Monthly rate i = (1 + net return)^(1/12) - 1
Ending value = start x (1 + net return)^years + deposit x ((1 + i)^n - 1) / i
n = 12 x years, with deposits made at the end of each month
The yearly return is treated as an effective annual rate. With a 0% net return, the value is the start plus all deposits.
7% versus 6% over 10 years
Both investments start with $10,000 and add $100 a month. Investment A earns 7% a year and ends at $36,776.69. Investment B earns 6% and ends at $34,155.82. Each puts in $22,000 in total, so A's growth is $14,776.69 and B's is $12,155.82, and A ends $2,620.87 ahead.
With no monthly deposits the same two returns give $19,671.51 and $17,908.48, a gap of $1,763.03. A single percentage point of return makes a visible difference over ten years, but the returns are only the assumptions you type.
How the comparison works
Each investment grows at the steady rate you enter, with deposits added at the end of every month and growing from then on. Both are shown on the same time span so that the difference in ending value comes only from the starting amount, return, deposits and cost you set.
A yearly cost is subtracted from the return as a simple approximation of fund fees. Real fees are charged on the balance and may vary.
Limits of a steady rate
Real investments do not earn the same return every year, and past results do not set future ones. Order of returns, taxes, inflation, trading costs and account rules are not modeled here.
Use the compound interest calculator to explore one investment with more options, the CAGR calculator to find the rate behind past values, and the investment fee calculator to see what fees take over time.
Assumptions and limits
- Each yearly return is steady and is an effective annual rate.
- Deposits are made at the end of every month and are the same size each month.
- A yearly cost is subtracted from the return in percentage points.
- Taxes, inflation, changing returns and withdrawals are not modeled, and no return is guaranteed.
Frequently asked questions
How do I compare two investments?
Enter the same time span and each investment's starting amount, yearly return and deposits. The ending values show how the assumptions play out, though real returns will differ.
Why is the return treated as an effective annual rate?
It keeps the comparison simple. A 7% return means a balance grows 7% in a full year, and deposits made during the year grow at the matching monthly rate.
How are fees handled?
The yearly cost is subtracted from the return before growing the balance. That is an approximation, since real funds charge fees on the balance and may change them.
Can the result predict what I will have?
No. It shows what the entered returns would produce if they held every year. Actual returns vary and can be negative, so treat the figures as a comparison of assumptions.