Investment Calculator
Compound growth with regular contributions, showing what the annual fee costs over the period and what the result is worth in today's money.
Starting amount $10,000.00
Monthly contribution $400.00
Period 30.0 years
Return assumed 7%
Fee 1%
Return after the fee 6%
Final value $462,031.77
you put in $154,000.00
growth $308,031.77, 66.7% of the total
from the starting amount $60,225.75
from the contributions $401,806.02
In today's money $190,350.97
inflation assumed 3%
purchasing power lost 58.8% of the nominal figure
money halves every 23.4 years at this rate
real return 2.91%
What the 1% fee costs
value without it $569,153.37
value with it $462,031.77
the fee costs $107,121.60
as a share of the pot 18.8%
against what you put in 0.70× your contributions
why so much it is charged every year on the whole balance, including the growth the earlier fees would have made
The same projection at other fees
0% a year $569,153.37
0.25% a year $539,918.80
0.5% a year $512,389.21
1% a year $462,031.77 ← yours
1.5% a year $417,318.64
Along the way
after 5 years $41,396.51, of which $7,396.51 growth
after 10 years $83,745.71, of which $25,745.71 growth
after 20 years $217,918.40, of which $111,918.40 growth
after 30.0 years $462,031.77
When growth overtakes contributions
growth exceeds what you put in after about 20 years
a year of growth at the end $27,721.91
against a year of contributions $4,800.00
The 1% fee costs $107,121.60, which is 18.8% of the pot it would
otherwise have been. A fee is charged every year on the whole balance,
including on the growth the earlier fees would have produced, which is
why a number that sounds like a rounding error compounds into 18.8% of
the outcome.
In today's money the $462,031.77 is worth $190,350.97. That is the
figure to plan with: a projection in nominal terms is describing money
that buys less than the money you are holding now.
The projection assumes a constant return, and returns are not constant.
Over a long accumulation the average does most of the work, so the
assumption is tolerable. Once withdrawals start it is not: a bad first
few years with money coming out can exhaust a pot that the same returns
in a different order would have sustained. That is sequence risk and no
compound formula shows it.
Above about 12 percent as a long-run assumption, the projection is
fiction. Global equities have returned roughly five percent a year above
inflation over the last century, so seven percent nominal with three
percent inflation is a defensible pair and ten percent real is not.
Contributions are treated as made at the end of each month, which is the
conservative choice and matches a salary deduction. Paying at the start
of the month gives a slightly larger result, and the difference is about
one month of growth.
Regular contributions matter more than the rate early on and less later.
The figure above for when growth overtakes what you put in is the point
the balance starts doing the work, and it arrives sooner than most
people expect with a decent starting amount and later than they hope
without one.
Tax is not modelled and it changes the answer materially. A
tax-sheltered account, a taxable one and one with dividend withholding
produce three different outcomes from the same return, and the rules are
jurisdictional.
This is arithmetic, not advice. It does not know your circumstances,
your risk tolerance or your tax position, and a projection is not a
promise about any particular decade.
Output is valid and updates as you type.
Fix the highlighted fields to update the output.
A one percent annual fee does not cost one percent. On the projection below it costs $107,121, which is 18.8 percent of the pot it would otherwise have been.
The reason is that a fee is charged every year on the whole balance, including on the growth that the earlier fees would have produced. It compounds against you at the same rate the investment compounds for you, which is why a number that sounds like a rounding error turns into a fifth of the outcome over thirty years.
The other thing this shows is the result in today’s money. $462,031 in thirty years at three percent inflation buys what $190,351 buys now, and that is the figure to plan with.
How to use
- Put in the starting amount and the monthly contribution.
- Put in the return before fees, then the actual fee, including the platform charge.
- Add an inflation rate to see the result in today’s money.
Example
$10,000 to start, $400 a month, 7 percent before a 1 percent fee, 30 years:
Return after the fee 6%
Final value $462,031.77
you put in $154,000.00
growth $308,031.77, 66.7% of the total
In today's money $190,350.97
purchasing power lost 58.8% of the nominal figure
money halves every 23.4 years at this rate
real return 2.91%
What the 1% fee costs
value without it $569,153.37
the fee costs $107,121.60
as a share of the pot 18.8%
The same projection at other fees
0% a year $569,153.37
0.25% a year $539,918.80
1% a year $462,031.77 ← yours
1.5% a year $417,318.64
When growth overtakes contributions
growth exceeds what you put in after about 20 years
a year of growth at the end $27,721.91
against a year of contributions $4,800.00The gap between a 0.25 percent index fund and a 1 percent managed one is $77,887 on these numbers. That is the single most actionable figure on the page.
Pitfalls
Count every fee. The fund’s ongoing charge, the platform fee, transaction costs and any adviser charge all come out of the same balance. People put the fund charge in and forget the platform, which is often as large.
Nominal figures flatter. A projection that does not mention inflation is describing money that buys less than the money in your hand. At three percent, purchasing power halves every 23 years.
A constant return never happens. During accumulation the average does most of the work, so the assumption is tolerable. Once withdrawals start it is not: a bad first few years with money coming out can exhaust a pot that the same returns in a different order would have sustained. That is sequence risk, and no compound interest formula can show it.
Above about 12 percent, the projection is fiction. Global equities have returned roughly five percent a year above inflation over the last century. Seven percent nominal with three percent inflation is a defensible pair; ten percent real is a sales pitch.
Tax changes the answer. A tax-sheltered account, a taxable one and one with dividend withholding give three different outcomes from the same return, and the rules are jurisdictional. None of that is modelled here.
Contribution timing matters slightly. Contributions are treated as made at the end of each month, which is conservative and matches a salary deduction. Paying at the start gains about one month of growth.
Early contributions are worth far more than later ones. The same $400 invested thirty years out has roughly six times the effect of $400 invested ten years out at these rates, which is the whole argument for starting rather than for optimising.
Compatibility
Arithmetic in the browser: nothing is uploaded and nothing is stored.
Growth compounds monthly, at the annual rate divided by twelve, which is the convention these calculators use and is slightly different from annual compounding. Contributions are added at the end of each period. The fee is applied as a reduction in the annual return, which is how an ongoing charge behaves.
The fee cost is computed as the difference between the projection with and without it, so it includes the growth the fee money would have produced. The test suite checks that split and that the contributions and starting amount account for the whole result.
The inflation adjustment divides the final value by (1 + inflation)^years, giving purchasing power in
today’s terms, and the real return is shown as the exact Fisher relation rather than the subtraction people
usually use.
This is arithmetic, not advice. It does not know your circumstances, your risk tolerance or your tax position, and a projection is not a promise about any particular decade.