How It Works
A step-by-step guide to using WealthSim and understanding your investment projections
Quick Start Guide
Step 1: Enter Your Starting Point
Begin by entering your initial deposit - the amount you're starting with. Then add your monthly contribution - how much you plan to invest each month. Even small monthly contributions can make a huge difference over time.
Step 2: Set Your Timeline
Choose how long you plan to invest. The investment period can range from 1 to 50 years. Then set an annual interest rate or apply one of the static illustrative assumptions for a supported planning horizon.
Step 3: See Your Growth
Watch as the calculator instantly shows your projected balance, total invested amount, and interest earned. The interactive chart visualizes your wealth growth over time. You can even export your projection as a PDF report.
Understanding the Inputs
Initial Deposit
The lump sum you're starting with. This could be savings you already have, an inheritance, or any amount you're ready to invest right now. Even starting with $0 is fine if you plan to make monthly contributions.
Monthly Contribution
The amount you plan to invest each month. Consistency is key - even small amounts like $100/month can grow significantly over decades thanks to compound interest.
Investment Period
How long you plan to keep your money invested. The longer your timeline, the more time compound interest has to work its magic. For retirement planning, this might be 20-40 years.
Interest Rate
The annual rate used in the calculation. You can set a custom rate or use a WealthSim illustrative assumption. Those assumptions are not historical returns, forecasts, expected returns, recommendations, or promises.
Inflation Adjustment
Toggle this on to see your returns adjusted for inflation. This shows your "real" purchasing power over time, accounting for the fact that $100 today won't buy the same amount in 20 years.
Reading the Results
Future Balance
The total amount you'll have at the end of your investment period. This includes both the money you invested and the interest earned.
Total Invested
The sum of your initial deposit plus all monthly contributions. This is your "cost basis" - the actual money you put in.
Interest Earned
The profit generated by compound interest. This is the difference between your future balance and total invested - essentially "free money" earned through compound growth.
Effective Return
Your total return as a percentage. This shows how much your money grew relative to what you invested, giving you a clear picture of your investment performance.
Understanding the Chart
The area chart shows your wealth growth over time with two distinct sections:
- Light blue area - Your total invested amount (contributions over time)
- Dark blue area - Interest earned (the power of compound growth)
Notice how the interest earned (dark area) grows exponentially over time - that's compound interest in action!
Pro Tips
- 1Start early - Time is your greatest asset. Even small amounts invested young can outperform larger amounts invested later.
- 2Consistency matters - Regular monthly contributions often matter more than the initial deposit. Set up automatic investing to stay consistent.
- 3Compare scenarios - Use the comparison mode to test different strategies. What if you invested $200/month instead of $100? What if you started 5 years earlier?
- 4Use illustrative assumptions - Compare generic categories across 5, 10, 20, and 30-year planning horizons, then adjust the rate for your own scenario.
- 5Consider inflation - Always toggle on inflation adjustment to see your real purchasing power. A 7% return with 3% inflation is really only 4% in terms of buying power.