How It Works
This calculator compounds your initial investment annually at the return rate you enter. It also shows that future amount in 'today's dollars' by dividing it by the effect of inflation over the same period — a way of estimating real purchasing power, not just the nominal dollar figure.
If your expected return equals your expected inflation rate, the real (inflation-adjusted) value will show no growth, since the investment is only keeping pace with rising prices.
Formula
- P — Initial investment
- r — Expected annual return
- i — Expected annual inflation rate
- n — Number of years
Example
Example inputs: Initial investment $20,000, 8% expected annual return, 3% expected inflation, 15 years.
Result: Future value (nominal): $63,443.38. Future value in today's dollars: $40,721.89.
Frequently Asked Questions
What return rate should I use?
This calculator doesn't recommend a rate — enter whatever assumption fits what you're modeling. We don't endorse or predict any specific rate of return.
Why show a 'today's dollars' figure at all?
A dollar amount decades from now buys less than the same amount today, because prices rise over time. Showing the inflation-adjusted figure gives a more realistic sense of the purchasing power your investment could provide.
How is this different from the Compound Interest Calculator?
Compound Interest focuses on monthly contributions building up over time with monthly compounding. This calculator focuses on a single lump sum with annual compounding, and adds an inflation-adjusted view.
This calculator provides estimates for informational purposes only and should not be considered financial, tax, or legal advice.