Scenario Comparison
Investment Scenario Comparison
Compare two or three investment scenarios and see how contributions, returns, and time shape the ending value.
Comparison results
Set assumptions and compare to see results.
What is scenario comparison?
Putting different assumptions side by side shows how contribution size, timing and compounding time affect modeled ending wealth. This is a fixed-return comparison, not investment advice.
What drives the difference?
More initial capital compounds sooner. Regular contributions increase invested principal and its future growth. Higher returns magnify growth, while more years add contributions and compounding periods. Beginning-of-period contributions earn one extra period of modeled return compared with end-of-period contributions.
FORMULA
Formula and variables
For effective annual return r and m contributions per year, periodic rate i = (1 + r)^(1/m) − 1. End timing grows the balance by 1 + i before adding PMT; beginning timing adds PMT before growth. Initial principal PV starts at year 0. Number of periods n = years × m; total contributed = PV + PMT × n; investment gain = ending value − total contributed. This tool accepts an effective annual return; some traditional compound-interest tools on this site use a nominal annual rate, which is a different rate definition.
WORKED EXAMPLE
Worked example
Scenario A starts with 100,000, adds 5,000 at each month-end, assumes a 6% effective annual return and lasts 10 years. Its monthly rate is about 0.4868%, with 120 payments totaling 600,000 and total capital of 700,000. Scenario B starts with 100,000, adds 3,000 at each month-end, assumes 8% annually and lasts 10 years; periodic contributions total 360,000 and total capital is 460,000. Compare modeled ending wealth together with invested capital.
Model limitations
Expected return is an assumption, never a guarantee. The model applies a fixed rate each period; real returns vary. It excludes the sequence of market volatility, taxes, fees, trading costs, inflation, currency movements, and interruptions to actual cash flows.
FAQ
Why do scenarios with the same return differ?
Initial capital, contribution amount and frequency, timing, and investment years may all differ.
What changes with beginning-of-period contributions?
The payment is added before that period's growth and earns one additional period of modeled return.
Is the annual return simply divided by 12?
No. This tool uses (1+r)^(1/m)−1 so compounding m periods reproduces the specified effective annual return.
What happens when a scenario ends sooner?
Its line stops at its final investment year; we do not invent future values beyond that point.