Fisher Investments Calculator

Project your investment growth with compound interest, fees, taxes, and inflation factored in

 
Investment Calculator

Investment Parameters

Enter your investment details to project growth over time

$
Amount invested today
$
Amount added regularly
%
Annual nominal return before fees & taxes

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Understanding Investment Growth with Compound Interest

The power of compound interest is one of the most important concepts in personal finance and investing. Often called the "eighth wonder of the world" by financial experts, compound interest can transform modest savings into substantial wealth over time.

How Compound Interest Works

Compound interest means earning interest on both your original principal AND on the interest already earned. This creates exponential growth over time. The formula for compound interest is:

Compound Interest Formula

A = P(1 + r/n)^(nt)

Where:
• A = Final amount
• P = Principal (initial investment)
• r = Annual interest rate (as decimal)
• n = Number of times interest compounds per year
• t = Number of years

Example Calculation

Let's examine how $10,000 grows with 6% annual return over 20 years:

Simple Interest:
• Year 1: $10,000 × 6% = $600 gain
• Each year: Same $600 gain
• 20-year total: $10,000 + ($600 × 20) = $22,000

Compound Interest (annual compounding):
• Year 1: $10,000 × 6% = $600 gain → $10,600
• Year 2: $10,600 × 6% = $636 gain → $11,236
• 20-year total: $10,000 × (1.06)^20 = $32,071

The compounding effect adds $10,071 extra compared to simple interest!

Key Factors Affecting Your Returns

Factors That Increase Returns

• Higher rate of return

• More frequent compounding

• Regular contributions

• Longer time horizon

Factors That Reduce Returns

• Investment fees

• Taxes on gains

• Inflation

• Market volatility

Nominal vs. Real Returns

It's crucial to understand the difference between nominal and real returns:

  • Nominal Returns: Your investment gains before adjusting for inflation
  • Real Returns: Your investment gains after accounting for inflation (what actually matters for purchasing power)

For example, if your investments grow 8% in a year with 3% inflation, your real return is only about 5%.

Important Disclaimer: Fisher Investments Calculator is an education tool only; the results are hypothetical. It is not a predictive tool and does not guarantee any particular outcome. The tool illustrates how different situations and user decisions affect a hypothetical retirement income plan. The calculator's results should not be the basis for any investment decisions. Investing in securities involves the risk of loss.

Frequently Asked Questions

Compound interest is interest calculated on the initial principal and also on the accumulated interest from previous periods. It's important because it allows investments to grow exponentially over time, making it one of the most powerful wealth-building tools available to investors.

Even small annual fees can significantly reduce your long-term returns due to compounding. For example, a 1% annual fee on a $100,000 portfolio earning 7% annually could reduce your ending balance by over $100,000 after 30 years. That's why it's important to consider fee structures when making investment decisions.

Nominal returns are the total gains before adjusting for inflation. Real returns are what matter most—they're your gains after accounting for inflation, showing your true increase in purchasing power. For example, 8% nominal return with 3% inflation equals about 5% real return.

Time is the most critical factor in investment growth due to compounding. The longer your money remains invested, the more dramatic the compounding effect. Starting early gives your investments more time to grow, which is why financial advisors emphasize beginning retirement savings as soon as possible.

Yes, this calculator is excellent for retirement planning scenarios. It helps you project how regular contributions might grow over your working years. However, remember that this is an educational tool with hypothetical projections. For actual retirement planning, consult with a qualified financial advisor who can consider your complete financial situation.