Total return vs. price return — the number most calculators hide
When you see "the S&P 500 returned 10% annualized over the long term," that's total return — price appreciation plus reinvested dividends. The price-only return is closer to 7%. The extra 3% comes from dividends that paid you cash that you then used to buy more shares, which paid more dividends, which bought more shares. Over 30 years, reinvested dividends can produce roughly 40% of the total return — not a rounding error. This calculator separates the two explicitly so you can see what the dividend reinvestment is actually doing for you.
The math is straightforward. Each month, the portfolio grows at the price return rate, throws off a small dividend at the dividend yield rate, and either reinvests that dividend or pays it out as cash. Your monthly contribution gets added on top. Compound for the full period and you have a realistic picture of what a real index-style position would have done.
What to type into the inputs
Initial investment
The lump sum you're starting with. If you're tracking an existing portfolio, use today's balance. If you're modeling a new investment from scratch, this is the check you're writing on day one.
Monthly contribution
Dollar-cost averaging — a fixed amount contributed every month regardless of market level. This is what virtually every retirement account does via payroll deduction, and it's the correct default behavior for long-term investing. The calculator assumes contributions go in at the start of each month.
Expected price return
The part of the return that comes from shares going up in value, not from dividends. Long-term S&P 500 price return is roughly 6–7% nominal; factor in dividends separately. For international stocks use 5–6%; for small-cap value 7–8% historically; for bonds 2–4%. A 70/30 stock/bond portfolio lands around 6% blended.
Dividend yield
The annual dividend paid as a percentage of portfolio value. The S&P 500 has historically yielded around 1.8–2.5%. A dividend-tilted portfolio (VYM, SCHD) yields 3–4%. Individual dividend stocks can yield 5%+ but often reflect distressed businesses. Use 1.8–2% as a default for broad-market investing.
Reinvest dividends
Checked = DRIP (Dividend Reinvestment Plan). Every dividend buys more shares. Unchecked = dividends come out as cash. For retirement accounts, always reinvest. For a taxable account you're using as income, cash may make more sense.
Understanding the outputs
Final portfolio balance
Total value at the end of the horizon, in nominal dollars. To see what this is worth in today's purchasing power, run it through the inflation calculator.
Total return vs. CAGR
Total return is simple: (ending value − total invested) ÷ total invested. CAGR (compound annual growth rate) is the annualized rate that would have produced your ending balance from your starting balance. Both are valid; CAGR is the number you see quoted in fund literature.
Dividends received
The cumulative dollars thrown off as dividends over the horizon. Useful context — even if you're reinvesting, this is the total pool of cash the portfolio generated along the way.
The hidden costs that eat investment returns
This calculator assumes your stated return rate is net of cost. In reality, every portfolio has expense drags that reduce that number:
- Expense ratios: index funds (VTI, VOO) charge 0.03–0.10% per year. Actively managed funds often charge 0.7–1.2%. Over 30 years, a 1% expense ratio difference costs roughly 25% of your final balance.
- Trading costs:bid/ask spreads and brokerage fees. Mostly gone at major brokers for ETFs and stocks, but they're still there on some platforms.
- Tax drag:in a taxable account, dividends and realized capital gains trigger tax bills. Even reinvested dividends are taxable in the year they're paid. Depending on your bracket, tax drag might reduce your effective return by 0.5–2% per year.
- Cash drag: uninvested cash sitting in a brokerage sweep account earns nothing. A 3% cash allocation losing 7% opportunity cost for 30 years is substantial.
The right mental model for investment returns
Markets don't return a steady 8%. They return 25%, then lose 15%, then return 12%, then lose 2%, then return 18%. The calculator's smooth curve is a long-run average; the actual experience is volatile. Two rules to internalize:
- Don't check daily. Daily price movement is noise, not signal. Check quarterly at most — and ignore the noise during checks.
- Don't panic-sell in downturns.Every 10+ year period in S&P 500 history has been positive, including windows that started right before the Great Depression. Selling during a drawdown locks in the loss; holding through captures the recovery.
How this compares to the other calculators
- Compound interest calculator — similar math but no distinction between price return and dividend yield. Use this one when dividends matter.
- Retirement calculator — same math structure but explicitly frames it as retirement planning with inflation adjustments.
- FIRE calculator — inverts the question: how much do you need invested to live off the returns?
FAQ
Why is my portfolio doing worse than this calculator says?
Probably tax drag, fees, cash allocation, or just that you're in a shorter time horizon than the long-run averages assume. 10-year windows can swing wildly; 30-year windows converge to the long-run average.
Should I include my 401(k) employer match?
Not in this calculator — but do include it in the retirement calculator, which is purpose-built for that.
What rate should I use for a balanced portfolio?
60/40 stock/bond portfolio: roughly 5–6% nominal price return, 1.5% dividend yield. Adjust down 1% if you want a conservative planning number.