How the recurring investment calculator works

A recurring investment — also known as automatic, dollar-cost-averaging investing — works by adding a fixed amount every month and letting the whole balance compound. This calculator steps through the plan month by month: each month your existing balance earns a twelfth of your annual return, then your new contribution is added on top. If you set an annual step-up, the monthly amount increases at the start of every year.

The result separates what you actually paid in (total invested) from the wealth your money generated on its own (gains). For a one-time lump sum instead, use our Lump Sum Calculator; to include fund fees, see the Mutual Fund Returns Calculator.

Why the step-up matters

Most people’s income rises over time, but their investing stays flat. Raising your monthly contribution by even 5-10% a year — roughly in line with pay rises — dramatically increases your final balance, because those bigger contributions still have years to compound. A modest step-up often adds more to your outcome than chasing a slightly higher return, and it’s entirely within your control.

• Dollar-cost averaging: investing the same amount monthly buys more shares when prices are low and fewer when high, smoothing out volatility.
• Automation beats timing: a consistent monthly habit almost always outperforms trying to time the market.
• Start early: the first dollars you invest compound the longest, so time in the market is your biggest advantage.

Frequently asked questions