Investment calculator

Two things drive the answer, and one of them is not the return

An investment projection has three inputs that matter: what you start with, what you add, and what it earns. People spend most of their attention on the third, and for the first decade or so the second one matters more.

The split bar on this page makes that concrete. Early on it is nearly all contributions, because there is little balance to earn anything. The crossover, where growth overtakes everything you have paid in, typically arrives somewhere between year fifteen and year twenty-five at ordinary rates. After that the contributions barely move the needle and the return is doing all the work.

The practical version of that: increasing a monthly contribution is fully under your control and takes effect immediately. Increasing a return is not under your control at all. Move the two fields and see which one changes the answer more over your actual horizon.

What a fixed rate is and is not

This page grows money at the same rate every single month. No real investment does that. A portfolio that averages seven per cent does it by way of years at twenty-five and years at minus fifteen, and the order those arrive in changes the outcome even when the average does not.

That is not a reason to distrust the projection; it is a reason to read it as what it is. A fixed-rate projection is the central case, the thing to plan around, and the right way to use it is to run it three times: at a pessimistic rate, at the one you expect, and at an optimistic one. The spread between those three answers is more informative than any one of them.

It also means the figure has no risk in it. Two investments with the same expected return and very different volatility produce the same number here and very different experiences.

Contributions at the start or the end of the period

The timing field is worth one line of explanation. A contribution made at the start of a month earns that month's interest; one made at the end does not. Over a long horizon this is worth roughly one extra period of growth on every contribution, which is small but free. If your contribution goes out on pay day, it is a start-of-period contribution.

Common questions

What return should I use?

This page will not suggest one, because a number printed on a calculator acquires an authority it has not earned. What it will say is where to look: long-run index returns are published by the index providers themselves, and any fund you are actually considering publishes its own past performance and its ongoing charge. Subtract the charge from whatever return you assume, because the projection here does not.

Does it include fees?

No. A platform fee and a fund charge of one per cent between them turn a seven per cent return into six, and over thirty years that is a large fraction of the final balance. The simplest way to include them is to enter the return you expect minus the fees you pay.

Does it include tax?

No. Investment taxation differs by country, by account wrapper and by whether the gain is realised, and a single field could not represent it honestly. Inside a tax-sheltered account the projection is close to right as it stands.

Why does a longer term change the answer so much more than a higher contribution?

Because the contribution adds money once and the term lets every contribution keep working. That is also the answer to why starting earlier is the most repeated piece of advice in personal finance: it is the one input nobody can increase later.

Is anything I type stored?

No. The calculation runs in your browser, nothing is sent anywhere, and the access log for this site drops the query string.