— Investment
Required Rate of Return Calculator
Find the annual return you would need to turn what you have today into your goal — with or without ongoing contributions.
Required annual rate of return
25.89%
- Total invested
- $10,000
- Required total gain
- $90,000
- Target amount
- $100,000
- Reality check
- Demanding — above ~15–20% a year
— Year by year
| Year | Invested | Gains | Balance |
|---|---|---|---|
| 1 | $10,000 | $2,589.25 | $12,589.25 |
| 2 | $10,000 | $5,848.93 | $15,848.93 |
| 3 | $10,000 | $9,952.62 | $19,952.62 |
| 4 | $10,000 | $15,118.86 | $25,118.86 |
| 5 | $10,000 | $21,622.78 | $31,622.78 |
| 6 | $10,000 | $29,810.72 | $39,810.72 |
| 7 | $10,000 | $40,118.72 | $50,118.72 |
| 8 | $10,000 | $53,095.73 | $63,095.73 |
| 9 | $10,000 | $69,432.82 | $79,432.82 |
| 10 | $10,000 | $90,000 | $100,000 |
— Path to your target
Download— How it works
No contributions: r = (Target ÷ Current)^(1 ÷ years) − 1. With contributions, the rate is solved numerically.
The question this answers
Most calculators ask “if I earn this return, what will I have?”. This one turns that around: you fix where you are, where you want to be, and how long you have, and it solves for the annual return that bridges the gap. It is the investor’s “what return do I need?” — not the textbook cost-of-capital sense of the phrase.
With no ongoing contributions the answer is a clean formula: the rate that compounds your current amount up to the target. Add a monthly contribution and there is no tidy formula any more, so the calculator solves for the rate numerically — but the idea is the same, and the path-to-target chart shows the trajectory that rate produces.
Worked example — $10,000 today, target $100,000 in 10 years, no contributions: r = (100,000 ÷ 10,000)^(1 ÷ 10) − 1 = 10^0.1 − 1 ≈ 25.9% a year. That is a demanding rate — adding contributions, or allowing more time, brings it down quickly.
Use it as a reality check
The real value of this tool is sanity-checking a goal. If the required return comes out around 7–10%, it is broadly in line with long-run stock-market history and looks achievable. If it comes out at 20% or more, that is a flag: sustaining such a return for years is rare and usually means taking on a lot of risk.
When the number looks too high, you have three levers — invest more up front, add or raise monthly contributions, or give the goal more time. Each pulls the required return down, and the calculator updates instantly so you can find a combination that lands in a realistic range. The built-in reality-check note appears whenever the figure strays into demanding territory.
Contributions, current savings and inflation
Money you can invest today does a lot of work, because it compounds for the full horizon — the “without current savings” figure shows how much steeper the required return becomes if you start from nothing, which is a good argument for investing what you can now. Ongoing contributions help too, and a step-up models contributions that rise with your income.
For goals years away, switch on a goal-inflation rate. A target that buys what you want today will cost more in future money, so the calculator grows the target accordingly and solves for the return needed to hit that larger, purchasing-power-preserving figure.
What it assumes
The required return is a single steady rate — real markets are anything but, so treat it as the average you would need, not a year-by-year path. It also assumes the contributions you enter are made as planned. If your actual returns or contributions differ, revisit the figure; it is a planning guide, not a guarantee.
— Reader questions
Is this the same as the cost of capital or CAPM required return?
No. This is the everyday investor sense — the return you personally need to reach a savings goal. The cost-of-capital or CAPM “required rate of return” is a different concept used to price risk and discount cash flows; this calculator does not attempt that.
What counts as a realistic required return?
Roughly 7–10% a year is in line with long-run broad stock-market returns before inflation, so a required return in that range looks achievable with a diversified portfolio. Much above that — into the high teens or twenties — is historically very hard to sustain and signals you should adjust the goal, the timeframe or the contributions.
How do contributions change the answer?
They lower the return you need, because more of the target comes from money you add rather than from growth. With contributions there is no simple formula, so the calculator solves for the rate numerically — but it updates live as you change the amount.
Why does the required return fall so much when I add a starting amount?
Because a lump invested today compounds for the entire horizon. The “without current savings” figure shows the return you would need from contributions alone, and the gap between the two is how much your existing savings are doing for you.
Should I turn on goal inflation?
For goals more than a few years away, yes. A target set in today’s money understates what you will actually need; goal inflation grows it to a future figure that preserves purchasing power, and the required return rises to match.
Can the required return be negative?
Yes — if your current amount and contributions already exceed the target, you need no growth at all, and the required return comes out at or below zero.