Formula
FV = P × (1 + r ÷ n)^(n × t)effective annual return = (1 + r ÷ n)ⁿ − 1value in today's money = FV ÷ (1 + inflation)^t
- P — amount invested
- r — annual return as a decimal
- n — compounding periods per year
- t — years
Each period's return is added to the balance, so later returns are earned on earlier returns too.
Worked example
1,00,000 at 12% for 10 years, with 6% inflation
- Amount invested
- 100,000
- Expected return per year
- 12 %
- Investment period (years)
- 10
- Returns are compounded
- Annually
- Expected inflation per year
- 6 %
- Currency symbol
- ₹ Rupee (INR)
Future value
₹3,10,584.82
Amount invested: ₹1,00,000.00
Estimated gain: ₹2,10,584.82
Total growth: 210.58%
How it works
A lumpsum is a single one-time investment, as opposed to the monthly instalments of a SIP. If it grows at a fixed yearly return, it multiplies by (1 + r) every year: 1,00,000 at 12% a year for 10 years becomes about 3,10,585 — more than three times as much, because each year's gain also earns returns.
The calculator shows the future value, the gain, the effective annual return (which differs from the nominal rate when compounding is more frequent than yearly), roughly how long the money takes to double, and a year-by-year table. If you enter an inflation rate it also shows what the final amount would be worth in today's money, which is often the more honest comparison over long periods.
A constant return is an assumption: markets do not pay the same rate every year, and fees and taxes reduce what you keep. Compare it with regular investing using the SIP Calculator, see the compounding effect on its own in the Compound Interest Calculator, or find the rate you actually earned with the CAGR Calculator.
Assumptions and limits
- A fixed rate of return for the whole period, with returns reinvested.
- Taxes, fees, exit loads and market risk are not included.
- This is an illustration, not a forecast or advice.