1. What is 6% Return on Investment?

A 6% return on investment (ROI) means your investment grows by 6% each year. This calculator helps you project the future value of an investment with a fixed 6% annual return.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( FV \) — Future Value (USD)
• \( P \) — Principal investment amount (USD)
• \( t \) — Time period in years
• 0.06 — 6% annual return rate

Explanation: The formula calculates how your investment grows with compound interest at a steady 6% annual rate.

3. Importance of ROI Calculation

Details: Understanding potential investment growth helps with financial planning, goal setting, and comparing investment options.

4. Using the Calculator

Tips: Enter your initial investment amount in USD and the number of years you plan to invest. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Is 6% a realistic return rate?
A: Historically, the stock market averages about 7% after inflation. 6% is a conservative estimate that accounts for some variability.

Q2: Does this account for taxes or fees?
A: No, this calculates gross returns. Actual returns may be lower after accounting for taxes, fees, and inflation.

Q3: How often is the interest compounded?
A: This calculator assumes annual compounding for simplicity.

Q4: Can I use this for monthly investments?
A: This calculator is for a single lump sum investment. For regular contributions, you'd need a different formula.

Q5: What if my actual returns vary year to year?
A: This shows a simplified projection. Actual investments may have more volatility.