Quick answer: 20,000 invested at 6% a year with 500 added each month grows to 118,327.61 in 10 years: 80,000 put in and 38,327.61 of growth.
How it's calculated
The end amount is FV = PV(1 + i)^N + C(1 + i·t)((1 + i)^N − 1)/i, where PV is the starting amount, C the contribution, i the annual return divided by the number of contributions a year, N the number of contributions and t = 1 for contributions at the start of each period (0 at the end). Growth compounds once per contribution period, so monthly contributions mean monthly compounding; with yearly compounding the end amount is a little lower.
Contribution and starting amount are solved directly from the same equation. The return rate and the number of years are found numerically, like the RATE and NPER functions in a spreadsheet.
A steady return is a simplification: markets rise and fall, and the order of good and bad years matters once you add or withdraw money. Use a conservative rate. To compare yearly returns, see the average return calculator.
Worked examples
- 20,000 + 500 a month, 6%, 10 years: FV = 118,327.61
- Target 150,000 in 10 years from 20,000 at 6%: contribution 693.27 a month
- Years to reach 150,000 with 500 a month: about 12.26 years
Frequently asked questions
What return should I assume?
It depends on the investment. Savings accounts and sukuk pay a few percent; diversified share funds have returned more over long periods but with large swings. Using a lower rate gives a safer plan.
Does it include fees and zakat?
No. Subtract fund fees from the rate. Zakat, if due, is usually 2.5% of zakatable wealth held for a lunar year; you can lower the rate to allow for it.
Why does contributing at the start help?
Each contribution is invested one period longer, so it earns one more period of growth.
Can it work out what I need to invest?
Yes. Choose what to calculate, such as the contribution or starting amount, and enter your target end amount.
Is the return guaranteed?
No. The calculator assumes a steady return, while real markets go up and down. Try lower returns to see how your plan copes.
How long does it take to double my money?
Roughly 72 divided by the yearly return. At 6% that is about 12 years, before adding any contributions.