Your step-by-step guide to building your first million-dollar portfolio and living life on your terms.
How to Use the Investing Calculator (Step by Step)
Here's a simple guide to estimate how much your investments can grow over 10, 20, or 30 years (or more):
- Add up your investments
- Calculate the total amount in all your investment accounts—this could include your brokerage, CPF, SRS, or other accounts.
- This total is your "Starting Amount."
- Figure out how much you can invest regularly
- Decide how much you can comfortably invest on a regular basis. A budget is a great way to make this easier, helping you plan to set aside a consistent amount for investing.
- For example, if you can invest $1000 per paycheck and get paid monthly, you'd set your "Contribution Amount" to $1000 and "Contribution Frequency" to monthly.
- Determine your expected return
- To estimate future growth, input an expected rate of return. Though past performance doesn't guarantee future results, you can use historical averages as a guide.
- For example, the S&P 500 has returned 8% to 10% per year over the last 50 years, so if you're investing in an S&P 500 index fund, you might use a 10% return under "Expected S&P 500 Return (%)."
- If you're familiar with the A.B.O.S. options strategy, you could potentially increase your return to 15%, or even 20%.
- Choose your investment timeframe
- Decide how long you plan to invest—whether it's 10, 20, or even 30 years. Enter this number in the "Years to Grow" input field.
- Finally, hit "Calculate" to see your investment growth.
If you're new to investing or looking for a safe, step-by-step approach to grow your wealth, join Chloe's free 2-hour Options to Freedom Masterclass. You'll learn how to use options safely to boost your returns, achieve your first million-dollar portfolio faster, and start living life on your terms!
Calculator Definitions
- Starting Amount: The total value of all your investment accounts combined.
- Additional Contribution: The amount you plan to invest regularly across all your accounts.
- Contribution Frequency: How often you plan to make additional contributions—monthly or annually.
- Expected S&P 500 Return (%): The average annual return you expect from your investments, such as a 10% return from an S&P 500 index fund.
- Expected A.B.O.S. Options Return (%): The average annual return you anticipate using the A.B.O.S. options strategy, famously used by Warren Buffett.
- Years to Grow: The number of years you want to calculate the growth of your investments.
- Total Contributions: The sum of your contributions over the chosen timeframe. For instance, investing $100 per month for 30 years equals $36,000.
- Total Interest Earned: The total amount of interest earned over your specified investment period. For this calculator, interest compounds annually, though some investments may compound monthly.
What to Consider When Using the Investing Calculator
While it's easy to run different scenarios and see how your investments might grow, keep these important factors in mind:
- Investment Returns Are Not Guaranteed
Investing always comes with some level of risk, including the possibility of loss. While the calculator shows how your investments could grow, returns are not the same every year—some years you might even experience losses. It's important to keep this in mind when planning your investment strategy and staying patient through market fluctuations.
- Diversification Is Key
Putting all your money into a single stock or asset can be risky—it's like putting all your eggs in one basket. Instead, invest in index funds that hold hundreds (or even thousands) of different assets to help lower your risk and diversify your portfolio.
- Automation Helps You Stay Consistent
A "set it and forget it" approach is powerful for long-term investing. By automating your contributions, you can ensure that you're consistently investing without overthinking it. This keeps emotions out of your strategy and helps build wealth steadily over time.
- The Calculator Can't Invest for You
While this calculator is a fantastic tool to visualize how your investments might grow, it's just the first step. The real magic happens when you take action and start investing. The sooner you get started, the sooner your money can start working for you!
Take the first step toward financial freedom today—sign up for the masterclass and start investing with confidence. 😊