Building Wealth Across Generations

Families often dream of leaving a financial legacy for children and grandchildren. While no one can predict investment returns with complete accuracy, planning ahead helps ensure assets grow steadily and are protected from erosion by taxes or inflation. This tool offers a straightforward projection of how your initial nest egg and ongoing contributions may compound over many years. Even modest savings can expand dramatically given enough time and disciplined investing.

The Compounding Formula

The calculator uses a basic compound interest equation with additional yearly contributions. The MathML expression below represents the future balance after years:

Here is the starting principal, is the yearly contribution, and is the growth rate expressed as a decimal. Compounding means each year's balance earns interest the next year, so consistent contributions early in life can snowball into sizable sums decades later.

Consider Inflation and Taxes

Inflation gradually erodes purchasing power. If your investments grow at 7% annually but inflation averages 2%, your real growth is closer to 5%. Taxes on dividends and capital gains further reduce returns unless assets sit in tax-advantaged accounts. Reviewing overall strategy with a financial professional ensures your projections align with real-world conditions.

Estimating Multi-Generational Impact

By adjusting the years input, you can explore how wealth might accumulate over two, three, or even four generations. Starting with a modest inheritance and adding steady annual contributions, the power of compounding can produce exponential growth. Discussing goals and expectations with family members fosters good stewardship so each generation preserves and builds upon the legacy.

Using the Calculator

Enter your starting principal, yearly contribution amount, expected annual growth rate, and the number of years you want to project. The calculator outputs your estimated wealth at the end of that period. This projection is a simplified model and doesn't account for market volatility or life changes, but it provides a helpful baseline when planning for the future.