Dave Ramsey Investment Calculator
Project investment growth using Dave Ramsey's commonly cited 12% return assumption -- shown side by side with a more conservative, compounded historical rate.
Dave Ramsey's commonly cited figure.
A compounded, not arithmetic-average, estimate.
For each rate's purchasing-power figure.
At Ramsey's 12%
$939,423.31
$448,674 in today's purchasing power
At 10% instead
$663,416.70
$316,852 in today's purchasing power
Both columns run the identical $500/mo contribution over 25 years (total contributed: $150,000.00) -- only the assumed return rate differs. The gap between the two, $276,006.61, is entirely the effect of that one assumption.
How it's calculated
Both columns run the exact same monthly-contribution stream through this site's one production growth engine -- only the assumed annual return differs:
balance = compound(contribution/mo, years, rate), compounded monthly
Each column also shows a "real" (inflation-adjusted) figure -- the nominal balance divided by (1 + inflation)years -- so you can compare purchasing power, not just a nominal dollar figure that inflation quietly erodes over a multi-decade horizon.
Worked example
The calculator's own defaults: $500/mo for 25 years, no starting balance, at 3% assumed inflation.
| Assumption | Nominal balance | Real (today's dollars) |
|---|---|---|
| Ramsey's 12% | $939,423.31 | $448,673.81 |
| A more conservative 10% | $663,416.70 | $316,851.51 |
A 2-percentage-point difference in assumed return -- 12% vs. 10% -- is the entire $276,006.61 gap between these two rows, on identical $150,000.00 in total contributions. Plug the same numbers into the calculator above and it lands on the same figures to the penny.
Frequently Asked Questions
Where does Dave Ramsey's 12% figure actually come from?
Ramsey Solutions states it directly: the S&P 500's historical average annual return from 1928 through 2025 is 11.86% (rounded to 12%), and cites several overlapping 30-year stretches (1981-2010, 1986-2015, 1996-2025) landing in a similar 11.7%-12.1% range (ramseysolutions.com/retirement/the-12-reality). That's a real, correctly cited historical figure -- the dispute below is about which kind of average it is, not whether the underlying data exists.
So why do so many financial commentators call 12% unrealistic?
Because it's an ARITHMETIC average of yearly returns, and an arithmetic average is always higher than the COMPOUND annual growth rate (CAGR) an actual investor experiences when returns are volatile -- a mathematical consequence of volatility, not a matter of opinion. Critics including Kahler Financial ("Ramsey's 12% investment return is unrealistic") point out that the S&P 500's compounded return over the same long stretches runs closer to 10% nominal, and closer to 7% after inflation. This calculator's second column defaults to that more conservative, compounded figure so you can see both side by side rather than taking either on faith.
What's the actual difference between an arithmetic average and a CAGR, with real numbers?
A simple example: a portfolio that gains 50% one year and loses 50% the next has an arithmetic average return of 0% ((50 + -50) / 2), but it's actually down 25% overall (1.5 x 0.5 = 0.75) -- a CAGR of about -13.4%/yr over those two years. Real market returns are far less extreme than that example, but the same directional effect applies: more volatility means a bigger gap between the arithmetic average and what you actually end up with.
Does this calculator account for taxes or fees?
No -- it's a pure growth projection at whichever return rate you enter, with no tax drag, fund expense ratios, or advisor fees subtracted. Real investment returns, whether at 12%, 10% or any other rate, are typically reduced by some combination of these -- the Roth IRA calculator on this site models the tax side of that question for a tax-advantaged account specifically.
Is a 12% return possible at all?
Yes, in some individual years and some multi-decade stretches it has happened, and it may happen again -- markets are volatile, not predictably bad. The disagreement isn't about whether 12% is possible, it's about whether it's the right number to PLAN around for a multi-decade projection, where a small difference in assumed rate compounds into a very large difference in projected balance, as this calculator's own two columns show.
Figures on this page are estimates from the inputs you enter, not financial advice, and this site is not affiliated with any employer, plan administrator, bank or the IRS. Real accounts vary by plan rules, taxes and fees this tool doesn't model -- see the Terms.