## Higher Returns Investment Calculator

### Calculator Legend

**Single Deposit Amount**: Enter the amount of your initial investment. If you are not investing anything yet, you can enter "0."

**Years of Growth**: Enter the number of years until you cash out your investment. Of course, in reality, you will more likely cash out your investment slowly, which will let you keep gaining income from it. But the purpose of this calculator is just to let you see how differences in interest rates affect differences in outcomes.

**Rate of Return 1**: Enter an annual rate of return, for instance, your current rate of return on your investment, as a percentage.

**Rate of Return 2**: Enter an annual rate of return, for instance, the rate of return on an investment you are considering, as a percentage.

**Regular Deposit Amount**: Enter the amount you will be depositing either each year or each month. If you will not be making any deposits after your initial investment, enter "o."

**Regular Deposit Type**: Enter whether you will make the deposit you listed above yearly or monthly.

**Make Deposits When?**Enter whether you will make the deposit you listed above at the beginning or end of the year/month.

### Investment Rates of Return: Wealth and Interest Explained

Over time, small differences in the rate of return on an investment really can add up to enormous sums of money. That may seem obvious, but few people understand just how enormous the sums can be. Even half a percentage point can allow you to retire years earlier. Just look at the following example.The difference between a $100,000 investment at 5% annual return and a $100,000 investment at 5.5% is only $500 at the end of the first year. But imagine if you hold that investment for twenty years. The difference between 5% and 5.5% wouldn't just be 20 times $500, or $10,000. Thanks to compound interest, the difference would be $26,446. For a couple who house is already paid for, that might mean an entire year of retirement. In just ten more years, the difference between the two balloons to $66,201, or two and a half years' retirement. Ten more years later, the difference is now $147,332. There are many retirees who barely have that much saved alone.

Of course, you probably won't have $100,000 when you start investing. But a higher interest rate has just as dramatic an impact on investments that you build up year after year. If you start out with nothing and invest $10,000 each year, after 40 years the difference between a 5% interest rate and a 5.5% interest rate is $158,058. Just imagine how many years earlier you could retire with that $158,058.

Naturally, it's not wise to put all your investment in a single high-yield/high-risk investment. But by spreading your risk out, you can really see a huge difference. Plus, as you near retirement, you can move a larger part of your investment into lower-risk/lower-yield areas.