Wealth Growth Timeline Simulator

Where the number comes from

Put 20,000 in, add 12,000 a year, assume 7% a year, and after 30 years the projection lands at 1,382,300.95. Total invested is 380,000: the 20,000 opening balance plus 360,000 of contributions. The other 1,002,300.95 is growth, which makes the projected balance 3.64 times everything that went in.

Contributions are spread evenly across the year and compounded monthly, not paid as a single annual lump. Twelve payments of 1,000 growing at 7% divided by twelve, month after month, beats one payment of 12,000 sitting until year end. At the defaults the difference between the two conventions is about 96,500 over 30 years, so it is worth knowing which one a projection uses before comparing it with another.

Why the last decade does the heavy lifting

The shape of that is the point. After 10 years the balance is 213,278.03. After 20 it is 601,701.44. After 30 it is 1,382,300.95. So years 21 to 30 add 780,599.51, more than the 581,701.44 added across the whole of the first two decades, on identical contributions. Compounding does most of its work at the end, which is also why the projection is so sensitive to the assumptions you feed it.

The tool projects one horizon at a time, from five years to fifty, in five-year steps. Running it three times at ten, twenty and thirty years is how you see the curve rather than a point on it.

What the return assumption is really doing

Change the return and the whole picture moves. At the same 20,000 start and 12,000 a year over 30 years, 6% gives 1,124,966.55 and 8% gives 1,709,074.04. Two percentage points, a gap of 584,107.49, larger than the 360,000 of contributions that produced either figure. Nobody knows which figure is right in advance, which is the honest answer to what return to assume.

Long-run realised returns are measured asset by asset and country by country rather than as one number. A dataset covering 16 advanced economies from 1870 to 2015 assembles total returns for equity, housing, bonds and bills precisely because the answer is not a single rate, which is worth remembering before treating any one figure as the return.

What it looks like in today's money

The figure is nominal, meaning it is expressed in future money rather than what that money buys. Consumer price series maintained for a large set of countries show how far prices drift over long horizons. At 2.5% a year, the 1,382,300.95 above is worth about 659,000 in present-day purchasing power. The 723,299 difference is more than half the headline number.

Tax and fees sit outside the model entirely. Both vary by country, by account type and by provider, and both compound in the same way returns do, in the opposite direction.

What the projection leaves out

• Tax, at whatever rate applies where you live, on gains and on income along the way
• Platform, fund and adviser fees, which reduce the compounding rate directly
• Inflation, unless you enter a return already net of it
• Any variation in the return from one year to the next
• Contribution changes: pay rises, career breaks, years where saving stops
• Withdrawals, and the order in which good and bad years arrive around them

For educational illustration only

This projection assumes a return that never varies, contributions that never stop, and no withdrawals. Real markets deliver the average as a sequence of good and bad years, and the order matters once money is being taken out. The output is one arithmetic scenario among many, not the number a portfolio will reach.