Investment Return Comparison Calculator

50,000 over 15 years at 6% vs 9%: final values 119,828 vs 182,124 — 62,296 gap. Even a 3% return gap compounds dramatically. When choosing between investment options, the gap is the clearest case for research before committing.

Quick example

With principal of 50,000 and horizon of 15 (plus option a return of 6% and option b return of 9%), the result is 62,296.21. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Principal, Horizon, Option A Return, and Option B Return. The rate and the time horizon usually dominate — compounding means a small change in either reshapes the final figure more than a similar shift in contribution size. Test this by doubling one input at a time.

What's happening under the hood

Compound growth for each return rate. Gap is absolute difference. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

Why investors run this

Most people's intuition for compounding is wrong — not because the math is hard, but because linear thinking doesn't account for curves. Running numbers through a calculator like this one is the cheapest way to recalibrate that intuition before making an irreversible decision about contribution rate, asset mix, or retirement age.

What this doesn't capture

Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. The number represents one scenario rather than a forecast.

Worked example with realistic numbers

Imagine starting with a principal of 100,000, investing over 20 years. Option A earns 5% annually; Option B earns 8% annually. After 20 years, Option A grows to approximately 265,330, while Option B reaches approximately 466,096. The difference is 200,766 — illustrating how a 3-percentage-point return gap translates to a six-figure outcome divergence over two decades.

How the calculation works

1. Principal is multiplied by (1 + return rate) for each year of the horizon
2. This calculation runs independently for both options
3. The absolute difference between final values is displayed as the gap

Common scenarios for this calculator

• Comparing asset classes: Bond portfolios (typically lower return) versus equity portfolios (typically higher return) over retirement
• Fee impact analysis: Same underlying return minus different fee structures, showing erosion over time
• Strategy comparison: Active management at one expected return versus passive indexing at another
• Savings rate choices: Lump sum invested early versus delayed start with higher return assumptions
• Risk-adjusted decisions: Higher-volatility option versus conservative option, holding time constant

What the result shows and does not show

Shows

The calculator models growth under constant annual returns. It displays final values for each option and the numerical gap between them. This gap illustrates compounding effect in isolation.

Does not show

• Year-by-year interim values or drawdown periods
• The probability that either return assumption will be achieved
• Impact of withdrawals, additional contributions, or rebalancing
• Inflation adjustment or purchasing power in future years
• Interaction between investment volatility and personal circumstances
• Tax or regulatory treatment specific to your jurisdiction

Educational use only

This calculator models a simplified scenario for learning purposes. Results estimate outcomes under steady-state assumptions and do not forecast actual performance. Use outputs as a starting point for further analysis and discussion with a financial adviser, not as a substitute for tailored guidance.