Investment return calculator
Project how an investment could grow over time. This is a planning tool for anyone building a portfolio, pension or savings goal — enter your inputs to see where regular investing could take you and how compounding does the heavy lifting.
How it works
The model compounds monthly. The annual return is divided by 12 to get a
monthly rate r. Starting from your lump sum, each month the balance is updated:
balance = balance × (1 + r) + monthly contribution
After the full number of years (12 × years months), it reports:
- Future value — the final balance.
- Total contributed — lump sum + all monthly contributions.
- Total growth — future value minus total contributed.
- Effective CAGR —
(future value ÷ total contributed)^(1 / years) − 1.
Worked example
Start with £5,000, add £300/month, assume 7% annual return over 20 years (r = 0.07 / 12 ≈ 0.00583 per month):
| Metric | Result |
|---|---|
| Total contributed | £77,000 |
| Future value | ≈ £176,000 |
| Total growth | ≈ £99,000 |
The CAGR comes out below 7% because the later contributions compounded for fewer years.
Why the effective CAGR is lower than the assumed return
This is a common point of confusion. If you assume 7% annual return, why does the CAGR show 5% or 6%? The reason is that contributions made in year 19 have only one year to compound, while the initial lump sum has 20 years. The effective CAGR compares the total final value against the total cash invested, blending together early money (highly compounded) and late money (barely compounded). The assumed 7% return is what each pound earns once it is invested; the CAGR is the blended return on all invested pounds over the whole period.
The compounding effect over time
To illustrate why starting early matters, consider two scenarios with the same total contribution:
| Investor | Start age | Monthly contribution | Years invested | Final value (at 7% return) |
|---|---|---|---|---|
| Early starter | 25 | £200/month | 40 years | (for example, approximately much higher) |
| Late starter | 35 | £200/month | 30 years | (for example, approximately lower) |
The early starter invests the same amount per month for 10 additional years. Time in the market, not the size of individual contributions, is the dominant variable in long-term growth. Use this tool to model different start dates and contribution levels to see the gap concretely.
Adjusting for inflation and fees
This calculator uses nominal returns and ignores inflation, taxes, and fees. To estimate real (inflation-adjusted) purchasing power, subtract your expected annual inflation rate from the assumed return before entering it. For example, if you expect 7% nominal returns and 3% inflation, enter 4% as your return to see the real projected value in today’s money.
Similarly, fund management fees reduce effective return. A 0.5% annual fee on a 7% gross return means roughly 6.5% net — over 20 years that difference compounds to a meaningful reduction in final value.
Common uses
- Pension/retirement modelling — project whether current contributions will reach a target fund at retirement age.
- Savings goal planning — how much to invest monthly to reach a specific amount in a specific number of years.
- Comparing lump sum vs. regular contribution — run the calculator with a large lump sum and no monthly contribution, then with no lump sum and a monthly contribution, to compare which strategy reaches your goal faster.
Real returns are never guaranteed — everything here is a guidance estimate calculated in your browser.