Investment Calculator
Project how your investments grow over time with compound returns. Every country has different tax-advantaged wrappers — the UK ISA, Canadian TFSA, and Australian Super can dramatically change your after-tax outcome.
$10K lump sum + $500/month at 8% for 20 years = ~$306,000. Historical stock returns: US S&P 500 ~10%/yr nominal. Global index ~8–9%. The rule of 72: your money doubles every 72÷rate years — at 8%, every 9 years. Tax wrappers (ISA, TFSA, Super) protect gains from capital gains tax and dividend tax.
Tax-Advantaged Investment Accounts by Country
| Account | Annual Limit | Tax Treatment | Withdrawal |
|---|---|---|---|
| 🇺🇸 Roth IRA | $7,000 (2024) | After-tax contributions, tax-free growth | Tax-free (age 59½+) |
| 🇺🇸 401(k) Traditional | $23,000 (2024) | Pre-tax contributions, tax-deferred | Taxed as income (age 59½+) |
| 🇬🇧 Stocks & Shares ISA | £20,000/year | After-tax, but no CGT/dividend tax | Tax-free anytime |
| 🇨🇦 TFSA | CA$7,000 (2024) | After-tax, all growth tax-free | Tax-free anytime |
| 🇨🇦 RRSP | 18% of income | Pre-tax contributions | Taxed as income at withdrawal |
| 🇦🇺 Super (concessional) | A$27,500/year | Taxed at 15% (vs marginal rate) | Tax-free (age 60+) |
| 🇩🇪 Riester-Rente | €2,100/year | Deductible contributions | Taxed at retirement rate |
How Compound Interest Works: The Mathematics of Growth
The compound growth formula is: FV = PV × (1 + r)ⁿ + PMT × [(1+r)ⁿ − 1] / r, where PV = present value (lump sum), r = annual return rate, n = years, and PMT = annual contribution. Example: $10,000 lump sum + $500/month ($6,000/year) at 8% for 20 years: FV = $10,000 × (1.08)²⁰ + $6,000 × [(1.08)²⁰ − 1] / 0.08 = $46,609 + $274,572 = $321,181. Of that total, you contributed only $10,000 + $120,000 = $130,000. The remaining $191,181 is pure compound growth — "money making money."
The Rule of 72
A quick mental shortcut: divide 72 by your expected annual return to get the approximate years to double your money. At 8% return: 72 ÷ 8 = 9 years to double. At 10%: 7.2 years. At 6%: 12 years. At 3% (savings account): 24 years. This rule also applies to inflation: at 3% inflation, prices double in 24 years — which is why long-term investors need equity-like returns, not just cash. The rule works because ln(2) ≈ 0.693 and 72 is a close approximation to 100 × ln(2) that divides evenly by many common numbers.
Tax Drag: Why Account Type Matters As Much As Return Rate
The tax wrapper you choose can be worth as much as 1–2% per year in additional returns. In a taxable account, you pay capital gains tax and dividend tax each year, compounding the drag. In a UK Stocks & Shares ISA, all growth is completely free of tax — no capital gains tax, no income tax on dividends. In Canada's TFSA, the same applies. Over 30 years, investing £500/month at 8% in a taxable account (assuming 20% CGT drag reducing effective return to ~6.4%) yields approximately £490,000; in an ISA at the full 8%, it yields £680,000 — a £190,000 difference from account choice alone. Maximise tax-advantaged contributions before investing in taxable accounts.
Dollar-Cost Averaging vs Lump Sum Investing
Research consistently shows that lump-sum investing (investing all available cash immediately) outperforms dollar-cost averaging (DCA) roughly two-thirds of the time, because markets tend to rise over time. However, DCA reduces the emotional difficulty of investing and protects against the worst-case scenario of investing everything at a market peak. In practice, most people invest monthly via payroll contributions — this is automatic DCA — and this is entirely appropriate. If you have a windfall, the data favours lump-sum deployment, but the best strategy is the one you will actually stick to through market volatility.