Simple Investment Calculator

A nominal return is the raw percentage gain on an investment, before accounting for inflation. A real return adjusts for inflation, showing how much your purchasing power actually grew. If your portfolio returns 7% in a year when inflation runs at 2.5%, your real return is approximately 4.4% — the rest is offset by rising prices.

Over long time horizons, the gap between nominal and real returns compounds into a significant difference in buying power. The Inflation: The Math That Makes Future Money Smaller article works through the arithmetic in detail.

When real mode is enabled, the calculator still uses your entered contribution amount for every period. It projects that fixed-dollar path, then divides the ending nominal balance by (1 + inflation)^years so the result is in today's purchasing power. The inflation checkbox does not change how much you contribute.

If you contribute $500/month today and want the saving effort to keep pace with prices, the nominal deposit has to rise with inflation. That is a different model. The Inflation-Adjusted Investment Calculator indexes contributions and shows real and nominal balances together.

Inflation compounds silently alongside your investment returns. Over 25 years, even a moderate 2.5% annual inflation rate roughly halves purchasing power — meaning a $1,000,000 nominal balance may only buy what $540,000 buys today. The longer the time horizon, the larger this gap becomes, and the more misleading it is to plan using nominal figures alone.

You can explore how inflation has varied historically using the Historical Inflation Rates (CPI) tool, use the Inflation Time Machine to convert a specific dollar amount between two years using CPI data, or use the Future Buying Power Calculator to see what a constant inflation assumption does to purchasing power over a chosen horizon.

The money-weighted IRR (Internal Rate of Return) is derived from the actual cash flows: your starting deposit (an outflow at time zero), each recurring contribution (outflows at the end of each period), and the final projected balance (an inflow at the end). The calculator solves for the annualized discount rate that makes the net present value of all those cash flows equal to zero.

Unlike a simple average return, the IRR accounts for the timing and size of each contribution — so it reflects what your money actually earned, weighted by when it was invested. For most straightforward scenarios with constant contributions, the IRR will be close to (but not identical to) the expected return you entered.

This calculator assumes a constant expected return (no volatility or sequence-of-returns risk), fixed contribution amounts throughout (not increased with inflation), contributions occurring at the end of each period, compounding once per contribution period, and no fees or taxes. When real mode is enabled, it also assumes a constant inflation rate used only to express the same path in today's dollars.

These are simplified assumptions appropriate for first-pass estimates. Fees in particular can compound into a substantial drag over long horizons — the fee calculators quantify that impact explicitly. Taxes depend on account type: returns inside a TFSA are tax-free, while a taxable account will reduce effective returns depending on the type of income generated.

This calculator compounds returns once per contribution period — monthly contributions compound monthly, and annual contributions compound annually. The annual return is converted so the effective annual growth rate is preserved either way. Frequency mainly changes contribution timing (twelve smaller deposits versus one annual deposit), not the compounding power of the same annual rate.

For a transparent look at how compounding multipliers work at different rates and horizons, see the Compound Interest Multipliers Table. For a deeper explanation of the compounding mechanic itself, see Compound Interest: The Ultimate Wealth Builder.