Investment Calculator
See how a starting balance and a steady monthly contribution can grow at a chosen rate of return, with both the nominal ending balance and the inflation-adjusted value in today's money.
Ending balance (nominal)
£462,290.03
- Total contributed
- £160,000.00
- Investment gains
- £302,290.03
- Ending balance (today's money)
- £249,354.89
- Real gains (today's money)
- £89,354.89
Nominal balance compounds the starting amount and monthly contributions at the chosen return: FV = PV·(1+r)^n + PMT·((1+r)^n−1)/r, where r = annual return / 12 and n = years × 12. The 'today's money' figure divides the nominal balance by (1 + inflation)^years to show purchasing power in current pounds — the real-return view that matters for long-horizon goals.
How to use this calculator
Enter the lump sum you already have invested, the contribution you plan to add each month, the expected annual return on the portfolio, your assumed inflation rate, and the number of years you want to project. The calculator shows the nominal ending balance, the total you contributed, the investment gains, and the inflation-adjusted balance in today's money.
How the calculation works
The starting amount compounds at the chosen annual return with monthly compounding: PV·(1+r)^n, where r = return/12 and n = years × 12. Monthly contributions follow the standard ordinary-annuity future-value formula: PMT · ((1+r)^n − 1) / r. The two are added to get the nominal ending balance. The real (today's-money) balance divides the nominal figure by (1 + inflation)^years — the Fisher adjustment for purchasing power — so a portfolio worth £500,000 in 25 years at 2.5% inflation is worth about £270,000 in today's spending power.
Worked example
Example: £10,000 starting investment, £500/month, 7% annual return, 2.5% inflation, 25 years. Monthly rate r = 0.005833, n = 300 months. Lump-sum future value = 10,000 · 1.005833^300 ≈ £57,254. Contribution future value = 500 · (1.005833^300 − 1) / 0.005833 ≈ £405,036. Nominal balance ≈ £462,290 from £160,000 of contributions, so investment gains ≈ £302,290. Real balance = 462,290 / 1.025^25 ≈ £249,355 in today's money — a useful sanity check on a long-horizon plan.
Frequently asked questions
What is a realistic expected return for an investment calculator?
There is no single right answer — it depends on the asset mix and the horizon. Historical long-run averages frequently quoted: global equities around 7–9% nominal, a 60/40 stocks-and-bonds portfolio around 6–7% nominal, bonds around 3–5% nominal, all before fees and tax. For long-term planning many advisers use 5–7% as a conservative real-return assumption. The number you enter is an assumption, not a forecast; running the calculator at a low, medium, and high rate gives a better feel for the range of possible outcomes than picking a single point estimate.
Why does the calculator show a "today's money" figure?
Inflation erodes purchasing power, so a balance of £500,000 in 30 years buys far less than £500,000 today. The "today's money" (real) value divides the nominal balance by (1 + inflation)^years, expressing the ending portfolio in current pounds. For long horizons this is usually the more meaningful number — a 7% nominal return with 2.5% inflation is roughly 4.4% real, so the inflation-adjusted growth chart is much flatter than the nominal one. Both views matter: the nominal balance is what you will actually see on a statement; the real balance is what it will actually buy.
Does this assume the monthly contribution stays constant?
Yes — this calculator models a flat monthly contribution for the entire term. In reality most investors increase contributions over time, usually in line with pay rises. To approximate this, you can either enter your average contribution across the horizon (rough but quick) or split the projection: run it for the first stretch at the current contribution, take the ending balance as the new starting amount, and run it again with the higher contribution. For a more sophisticated model with annual contribution escalation, use a retirement-specific calculator.
Are fees and tax included?
No — the calculator returns a gross figure assuming the chosen return is the net-of-fees return inside a tax-sheltered wrapper (e.g. an ISA, SIPP, IRA, or 401(k)). For a taxable account, subtract your effective tax drag from the return rate (often 0.3–0.7 percentage points for a buy-and-hold equity portfolio). For fees, subtract the total expense ratio of your funds plus any platform fee — a low-cost index fund portfolio is around 0.2–0.3% per year, an actively managed fund is often 0.8–1.5%. A return entered as 7% with 0.5% fees and a 0.3% tax drag is effectively a 6.2% input.
How does compounding frequency affect the result?
This calculator uses monthly compounding to match the monthly contribution schedule, which is the most common convention for retirement and savings calculators. The difference between monthly and annual compounding at the same nominal rate is small but non-zero: 7% nominal compounded monthly produces an effective annual rate of about 7.23%, whereas 7% compounded annually stays at 7%. Over 30 years that gap adds a few percent to the final balance. If a provider quotes an effective annual rate (EAR or APY) rather than a nominal rate, convert with nominal = 12 · ((1 + EAR)^(1/12) − 1) before entering.
What is the difference between this and a compound interest calculator?
Mathematically nothing — both calculate the future value of a starting balance plus regular contributions at a periodic rate. The framing differs. A compound interest calculator focuses on the mechanism of compounding and is typically used for savings accounts, CDs, or fixed-rate products. An investment calculator frames the same maths around a portfolio with an assumed return rate and usually adds the inflation-adjusted real value, because investment horizons are long enough that purchasing power matters. Use whichever framing fits your mental model — the underlying TVM formula is identical.