Wealth Builder Calculator

About the Wealth Builder Calculator

Projects how an initial investment plus regular monthly contributions grow over time with compound returns.

How to use this calculator

1. Enter your initial deposit as the starting amount you already have.
2. Enter the regular contribution amount, for example monthly or yearly.
3. Enter the expected return rate and the number of periods.
4. Read the future value estimate to see the projected total growth.

The formula explained

The formula computes the future value of an initial lump sum and a series of regular contributions after a set number of periods. It shows how both compounding and repeated investing contribute to the final total.

• FV = future value, the estimated amount at the end
• P = initial principal or starting amount
• r = interest or growth rate per period, written as a decimal
• n = number of periods
• PMT = regular payment or contribution made each period

Step by step method

1. Start with the initial amount, then grow it by the factor \(1+r\) for each period, so it becomes \(P(1+r)^n\).
2. Find the future value of the repeated contributions with \(PMT\frac{(1+r)^n-1}{r}\).
3. Add the two parts together to get the total future value, \(FV\).

Worked example

Problem. You invest \(P = 2000\) dollars now, then add \(PMT = 150\) dollars each month for \(n = 12\) months at a monthly return rate of \(r = 0.005\). What is the future value?

1. Compute the growth factor, \(1+r = 1.005\), then calculate \(1.005^{12} \\approx 1.0617\).
2. Find the starting amount growth, \(2000 \\times 1.0617 \\approx 2123.40\), and the contribution growth, \(150\\frac{1.0617-1}{0.005} \\approx 1851.00\).
3. Add them, \(FV \\approx 2123.40 + 1851.00 = 3974.40\).

Tips and common mistakes

• Make sure \(r\) matches the same period as \(PMT\), so monthly payments use a monthly rate.
• If the rate is \(0\), the formula with \(\frac{(1+r)^n-1}{r}\) does not work directly, so the calculator may need a special case.

Frequently asked questions