What return rate should I use for investment projections?

The S&P 500 has averaged ~10.4% nominal and ~7.25% real (after inflation) since 1926. Use 7% for conservative planning (real return) or 10% for nominal projections. Bond-heavy portfolios typically return 4-6%.

How does tax treatment affect investment returns?

Taxable accounts have annual dividend tax drag and capital gains tax at withdrawal (0-23.8%). Tax-deferred accounts (401k/IRA) grow tax-free but withdrawals are taxed as ordinary income (up to 37%). Roth accounts have no tax on growth or withdrawal. Over 30 years, the Roth advantage can be 10-20% more.

What is the NIIT and does it apply to my investments?

The Net Investment Income Tax (NIIT) is 3.8% on investment income for individuals above $200,000 (single) or $250,000 (MFJ). These thresholds are not indexed for inflation, unchanged since 2013. OBBBA (2025) did not change the NIIT.

How much does waiting to invest cost me?

At 7% return, reaching $1M requires ~$381/month starting at 25, ~$555/month at 30 (+46%), ~$820/month at 35 (+115%), and ~$1,234/month at 40 (+224%). Each year of delay loses the most powerful compounding years.

Investment Calculator 2026

Q: Should I invest a lump sum or dollar-cost average?

Vanguard's study (1976-2022) shows lump sum beats DCA approximately 68% of the time, with 2-3% average outperformance over 10 years. DCA reduces downside risk if markets drop immediately after investing.

Project your growth with real tax impact. Compare tax treatments, lump sum vs DCA, and find your monthly savings target.

Initial investment

Monthly contribution

Expected annual return

S&P 500 avg: ~10% nominal, ~7% real

Investment period

years

Tax treatment

Determines how gains are taxed

Filing status

Annual income (other)

For tax bracket & capital gains rate

Dividend yield

Annual tax drag on taxable accounts

—

Returns are not guaranteed. Historical averages (S&P 500 ~10% nominal, ~7% real) are for reference only. Tax treatment matters: a Roth account growing tax-free can be worth significantly more than a taxable account with the same contributions.

Try another scenario

How to Use This Calculator

Tab "Growth Projector"

Enter your initial investment, monthly contribution, expected return, and investment period. The calculator projects your balance in three tax treatments simultaneously: Taxable (brokerage — annual dividend tax drag + capital gains at withdrawal), Tax-Deferred (401k/Traditional IRA — ordinary income tax at withdrawal), and Tax-Free (Roth IRA/401k — no tax on growth or withdrawal). The side-by-side comparison shows exactly how much tax treatment costs you over time.

Tab "Lump Sum vs DCA"

Got a windfall? Enter your total amount and a DCA period (months). The calculator compares investing everything immediately vs spreading it out. It also models a worst-case 30% market drop to show how DCA limits downside risk. Historically, lump sum wins ~68% of the time — but the gap shrinks in volatile markets.

Tab "Reach a Goal"

Set your target amount, timeline, and expected return. The calculator tells you exactly how much to save per month. The sensitivity table shows how different return assumptions change the number. The cost of waiting table shows how delaying 5, 10, or 15 years dramatically increases the monthly savings required.

The Formulas

Future Value (with monthly contributions):
FV = PV × (1 + r)ⁿ + PMT × [((1 + r)ⁿ − 1) / r]
Where: PV = initial investment, r = monthly rate, n = total months, PMT = monthly contribution

Monthly Savings Needed for a Goal:
PMT = (FV − PV × (1+r)ⁿ) × r / ((1+r)ⁿ − 1)

Long-Term Capital Gains Rates (2026):
0%: Single ≤$49,450 | MFJ ≤$98,900
15%: Single $49,451–$545,500 | MFJ $98,901–$613,700
20%: Above those thresholds

NIIT (Net Investment Income Tax):
3.8% on investment income above $200K (single) / $250K (MFJ)
Not indexed for inflation (unchanged since 2013)

Taxable Account Tax Drag:
Annual: dividends taxed at LTCG rate + NIIT if applicable
At withdrawal: remaining gains taxed at LTCG rate + NIIT

Tax-Deferred (401k/Traditional IRA):
No tax during growth. Entire withdrawal taxed as ordinary income.

Tax-Free (Roth IRA/401k):
No tax on growth. No tax at withdrawal. Contributions from after-tax dollars.

The S&P 500 has returned approximately 10.4% nominal (7.25% real) annualized since 1926. This calculator uses 3% as a default inflation assumption based on long-term CPI averages. Past performance does not guarantee future results.

Example

Jordan — Software Engineer, Age 28, Single

Starting with $10,000 saved, contributing $500/month at 7% return for 30 years. Annual income $95,000. Comparing a taxable brokerage vs Roth IRA.

Initial investment$10,000

Monthly contribution$500

Period30 years

Expected return7%

Total contributions$190,000

Nominal balance~$611,000

Taxable account (after taxes)~$541,000

Roth IRA (tax-free)~$611,000

Roth advantage~$70,000

Jordan's Roth advantage: ~$70,000 more after 30 years. The annual dividend tax drag in the taxable account compounds over time, and capital gains tax at withdrawal takes another chunk. The "Reach a Goal" tab shows that to hit $1M in 30 years at 7%, Jordan needs about $866/month — or $1,515/month if waiting until age 38.

Frequently Asked Questions

What return rate should I use?▼

The S&P 500 has averaged ~10.4% nominal (before inflation) and ~7.25% real (after inflation) since 1926. For conservative planning, use 7% (real return). For nominal projections, use 10%. Bond-heavy portfolios: 4-6%. Remember: these are averages — actual returns in any given year range from −37% to +53%.

Should I invest a lump sum or dollar-cost average?▼

Vanguard's study (1976-2022, US/UK/Australia) shows lump sum investing beats DCA approximately 68% of the time, with an average outperformance of 2-3% over 10 years. This makes sense: markets trend upward, so money in the market sooner generally earns more. However, DCA limits downside risk if markets drop right after you invest — which matters more for large sums or if you'd panic-sell after a drop.

How does tax treatment affect my returns?▼

Three key differences: Taxable accounts — dividends are taxed annually (creating "tax drag") and capital gains are taxed at withdrawal (0%/15%/20% + 3.8% NIIT if applicable). Tax-deferred (401k/Traditional IRA) — no tax during growth, but entire withdrawal is taxed as ordinary income (up to 37%). Tax-free (Roth) — no tax on growth or withdrawal. Over 30 years, the Roth advantage can be 10-20% more than a taxable account with identical contributions.

What is the NIIT (Net Investment Income Tax)?▼

The NIIT is an additional 3.8% tax on investment income (dividends, capital gains, interest) for individuals earning above $200,000 (single) or $250,000 (married filing jointly). These thresholds are NOT indexed for inflation — unchanged since 2013 — meaning more people are affected each year as incomes rise. The OBBBA (2025) did not change the NIIT.

How much does waiting cost me?▼

The cost of waiting is the most underestimated number in personal finance. At 7% return, to accumulate $1,000,000: starting at 25 requires ~$381/month, starting at 30 requires ~$555/month (+46%), starting at 35 requires ~$820/month (+115%), and starting at 40 requires ~$1,234/month (+224%). Every year of delay costs more than the last because you lose the most powerful years of compounding.

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