Recurring Investment Calculator

How a step-up contribution changes the outcome

This calculator models investing a fixed amount every month while increasing that amount by a set percentage each year. The logic is that your contributions should track your income — if you get a 5% raise, a 5% larger contribution keeps your saving rate steady rather than letting lifestyle absorb it.

Each month the balance grows by one month’s return, then the contribution is added. At the end of every year the contribution amount itself rises by your chosen step-up percentage, and the cycle repeats.

A worked example

Start at $300 a month, increase it 5% each year, earn 8% annually, and run it for 25 years. You’d finish with roughly $447,505.

Hold that contribution flat at $300 for all 25 years instead, and you’d end with about $285,308. The step-up is worth around $162,197 — a 57% larger balance, from raises you were probably getting anyway.

By year 25 the monthly contribution has grown from $300 to roughly $975. That sounds steep in isolation, but as a share of a salary that also grew over 25 years, it’s about the same commitment you started with.

When to use this instead of the compound interest calculator

Use this one whenever your contribution isn’t fixed — which, over a working career, is most of the time. It suits automatic investment plans, index fund contributions, and any strategy where you intend to raise the amount as income grows.

If your contribution genuinely stays flat, the compound interest calculator gives the same answer more simply. For a one-off lump sum with no additions, that tool is also the better fit.

Common mistakes people make with recurring investing

• Setting an unsustainable step-up. A 10% annual increase compounds fast. If raises don’t keep pace, you’ll abandon the plan — and a 3% step-up you maintain beats a 10% one you quit.
• Assuming a smooth return. Regular investing through a downturn actually buys more shares at lower prices, but the balance will still drop on paper. Expect that.
• Not automating it. Contributions that require a manual decision each month tend to get skipped in exactly the months money feels tight.
• Ignoring the expense ratio. On a 25-year horizon, fund fees compound against you just as reliably as returns compound for you.

What this calculator doesn’t account for

Returns are applied at a constant rate, and real markets vary year to year. Figures are nominal — before tax and before inflation. It doesn’t model fund fees, trading costs, dividend taxes, or missed contributions. It also assumes you never withdraw. Treat the output as the shape of the outcome rather than a precise number.