Calculator Inputs
Example Data Table
| Input | Example Value | Purpose |
|---|---|---|
| Initial Investment | $10,000 | Starting amount invested at the beginning of the test period. |
| Annual Contribution | $1,200 | Extra cash added each year to both comparison paths. |
| Portfolio Return | 9% | Your expected annual portfolio growth rate. |
| Annual Fee | 0.25% | Estimated yearly cost deducted after gross growth. |
| Inflation Rate | 2.5% | Used to show purchasing-power adjusted results. |
Formula Used
The calculator compounds each year separately. If contributions are set to the beginning of the year, the yearly deposit is added before growth. If they are set to the end of the year, the deposit is added after growth, fees, and tax.
Gross Gain = Opening Balance × Annual Return
Fee = Balance After Growth × Fee Rate
Tax = Max(Gross Gain − Fee, 0) × Tax Rate
Ending Balance = Balance After Growth − Fee − Tax + End Contribution
CAGR is calculated as: ((Ending Value ÷ Initial Value) ^ (1 ÷ Years)) − 1. Real CAGR adjusts nominal CAGR by inflation. The Sharpe style score compares annualized return above the risk-free rate with volatility.
How to Use This Calculator
- Enter your starting investment amount.
- Add your expected yearly contribution.
- Choose the start and end years for the benchmark test.
- Enter your portfolio return, fee, tax, and inflation assumptions.
- Edit any yearly benchmark return if your data source differs.
- Press the calculate button.
- Review CAGR, ending value, real return, drawdown, and excess return.
- Use the CSV or PDF buttons to save the result.
Benchmark Investing Since 2010
Why Compare Against a Benchmark?
A benchmark gives your portfolio a clear reference point. It shows whether your strategy added value or only followed the broad market. This calculator models a benchmark path and a custom portfolio path beside each other. That makes the result easier to read. You can compare ending value, annualized growth, real return, and risk-adjusted score.
What Makes This Tool Useful?
Many simple calculators only compound one return rate. This tool works year by year. It allows changing benchmark returns from 2010 onward. It also includes deposits, fees, taxes, inflation, contribution timing, drawdown, and volatility. These details matter. Small costs can reduce final wealth over long periods. Inflation can also make a strong nominal return look weaker in real terms.
Using the Result
Start with realistic assumptions. Use a contribution amount that matches your plan. Then enter a portfolio return that reflects your strategy. A higher ending balance is helpful, but it is not the full story. Review drawdown and Sharpe style score too. A smoother path may be easier to hold during difficult years.
Reading Excess Return
Excess return shows the portfolio result above or below the benchmark. A positive value means your inputs beat the benchmark path. A negative value means the benchmark performed better. This difference can come from return, timing, costs, or taxes.
Good Practice
Treat the output as a planning estimate. It is not a forecast. Markets change each year. Future returns may differ from past returns. Test several cases. Try a conservative case, a normal case, and an optimistic case. This gives a wider view before making allocation choices.
FAQs
What does this calculator compare?
It compares a benchmark growth path with a custom portfolio path. Both paths can include deposits, fees, taxes, and inflation adjustments.
Can I edit the yearly benchmark returns?
Yes. Each yearly return field is editable. Change any value before pressing the calculate button to match your preferred data source.
Does contribution timing matter?
Yes. Beginning-year contributions have more time to compound. End-year contributions are added after yearly growth, fees, and taxes.
What is CAGR?
CAGR is the annualized growth rate. It shows the steady yearly rate that would turn the starting value into the ending value.
What is real CAGR?
Real CAGR adjusts the annualized return for inflation. It helps show growth after considering reduced purchasing power.
Why include fees?
Fees reduce compounding each year. Even small annual costs can create a large difference over long investment periods.
What does drawdown mean?
Drawdown measures the largest drop from a previous high balance. It helps estimate how difficult the path may feel to hold.
Is this calculator investment advice?
No. It is an educational planning tool. Use it to compare assumptions, not as a guaranteed prediction or personal recommendation.