When to use our savings and investments growth calculator
The savings and investments growth calculator helps you estimate how much your money could grow over time, whether you’re starting with a lump sum, making regular monthly contributions, or both. It’s a simple way to explore the power of compound growth and plan for the future. Not sure whether to save or invest? Check out my article on how to choose the right option for you!
This tool can be useful in a variety of situations, such as:
- You’ve got some extra cash you’d like to put to work, like a work bonus, a lump sum from a retirement package, or a redundancy pay-out.
- You’re putting aside money every month and want to save or invest it.
- A combination of both: a lump sum and monthly contributions.
How do I use the savings and investments growth calculator?
It’s really simple to use! Just enter four key details:
- Initial sum (£):
- This is the amount of money you want to save or invest initially, entered in pounds sterling.
- Alternatively, you can use any currency: the maths stays the same!
- Monthly contribution (£):
- This is the amount of money you plan to set aside every month, entered in pounds sterling.
- Again, you can use any currency as it doesn’t affect the maths.
- Growth rate (%):
- This is the percentage growth your money earns each year.
- If you’re saving, this is called the Annual Interest Rate and is usually guaranteed.
- If you’re investing, it’s called the Annual Rate of Return and it isn’t guaranteed. In that case, it’s worth trying a few different values to explore possible scenarios.
- Number of years:
- This is how long you plan to leave your money untouched (no additions, no withdrawals) so it can grow over time.
If you’re not sure what the growth rate of your savings or investments is, but you know how much you invested and for how long, you can work it out using my growth rate calculator.
Let’s crunch the numbers: try the growth calculator!
Money Milestones
Important considerations
- Interest is calculated on a monthly basis.
- This calculator uses compound interest, meaning that interest is calculated on both the initial amount and the accumulated interest. Be sure to understand the difference between compound interest and simple interest, as they impact your returns differently.
- Monthly contributions are assumed to be made at the end of each month, after the interest is applied.
- Inflation can reduce the purchasing power of your returns over time. It might be useful to consider the impact of inflation when making long-term financial plans.
- If you plan to make withdrawals during the calculation period, this will reduce the growth of your investment. This tool assumes no withdrawals are made during the investment period.
- Depending on your personal circumstances, you may be required to pay tax on any gains, which will reduce the effective amount you receive.