Example
A realistic starting point: say you have €10,000 already invested, add €500 every month, and expect a 7% average annual return (That's a conservative assumption of future returns of a globally diversified equity portfolio. You can see more here). After 20 years, you'd have €292,465, of which €130,000 is your own contributions and €162,465 is growth. That's compound interest doing more than half the work for you, without you contributing a cent more than your own €500/month.
How to use it and what each input means
- Initial Investment - the current value of any investments you already hold today.
- Recurring Monthly Investment - how much you plan to add each month going forward.
- Period (Years) - your investment horizon. Longer horizons benefit disproportionately from compounding - the growth in the final 10 years typically exceeds the growth in the first 10, even with identical contributions.
- Annual Increase (%) - if you expect your monthly contribution to grow over time (e.g. with salary increases), enter that expected annual step-up here rather than manually recalculating each year.
- Expected Annual Return (%) - the average yearly return you're assuming. A long-term, globally diversified low-cost ETF portfolio has historically averaged around 6–8% nominal annually, though returns vary significantly year to year - this calculator assumes a constant rate for simplicity, not a guarantee.
FAQ
What return rate should I use?
7% is a commonly cited long-term average for a globally diversified stock portfolio, and it's a reasonable assumption for a basic forecast like the one above. In reality, there isn't one correct answer, and we must prepare for different scenarios - which is exactly what I do as part of the financial planning process I do for my clients. You can read in more detail on how exactly it's being done here.
Does this account for inflation?
No. The results are in nominal terms, meaning they don't adjust for the fact that a euro in 20 years buys less than a euro today. To think in today's purchasing power, subtract roughly 2% from your expected return as a rough inflation adjustment.
What's the difference between this and the Goal Seek Calculator?
This calculator answers "if I invest X per month, what will I end up with?" The Goal Seek Calculator answers the reverse question — "I want to end up with X, how much do I need to invest per month?" Use whichever matches the question you're actually asking.
Does this include fees?
No, the calculation assumes your full return compounds with no fee drag. In practice, ongoing fees (fund costs, platform fees, advisor fees) reduce your effective return, sometimes significantly. See my blog post here and here for a real breakdown of how much fees can cost you over decades.
Is this financial advice?
Absolutely not - this is an illustrative tool to help you understand compounding, not a personalized recommendation. If you want a plan built around your actual circumstances, that's what 1-on-1 consulting is for.