Free, accurate investment projections for ISAs, pensions, and portfolios. Updated for 2025. No signup required.
1. Use Your ISA Allowance First: The 2025/26 ISA allowance is £20,000. All growth within an ISA is completely tax-free - no capital gains tax, no dividend tax. Always prioritize ISAs before taxable accounts.
2. Understand Stocks & Shares ISA Benefits: Unlike Cash ISAs (3-5% returns), a Stocks & Shares ISA invests in equities with potential for 7-10% annual returns over long periods. Perfect for retirement savings 10+ years away.
3. Start Early - Compound Interest is Powerful: Investing £500/month from age 25 to 65 at 7% return = £1.2 million. Starting at age 35 with same amount = £600,000. That 10-year delay costs £600,000!
4. Dollar-Cost Averaging: Regular monthly contributions reduce timing risk. You automatically buy more shares when prices are low and fewer when prices are high, smoothing out market volatility.
5. Diversification is Key: Don't put all your money in one stock or sector. Use low-cost index funds (FTSE Global All Cap, S&P 500) to spread risk across hundreds of companies globally.
6. Keep Fees Low: Investment fees compound negatively. A 1% annual fee on a £100,000 portfolio costs £28,000 over 25 years! Use platforms like Vanguard (0.15% fees) or index funds with expense ratios under 0.2%.
7. Employer Pension = Free Money: If your employer matches pension contributions, always contribute enough to get the full match. It's an instant 100% return on investment!
8. Rebalance Annually: Review your portfolio once a year. If your target is 80% stocks / 20% bonds, rebalance back to this ratio by selling winners and buying underperformers.
1. Panic Selling During Market Crashes: The FTSE 100 has recovered from every crash in history. Investors who sold during the 2020 COVID crash at -35% missed the full recovery within 6 months. Stay invested for long-term goals.
2. Trying to Time the Market: Studies show 95% of investors underperform by trying to time entries and exits. Time IN the market beats timing THE market. Invest consistently regardless of market conditions.
3. Ignoring Inflation: If your investment returns 7% but inflation is 3%, your real return is only 4%. Always factor inflation into long-term projections. £100,000 in 30 years will have the purchasing power of ~£41,000 today at 3% inflation.
4. Overtrading: Every trade in a taxable account can trigger capital gains tax. Excessive trading also racks up fees. Buy quality investments and hold them for years, not months.
5. Not Using Tax-Efficient Accounts: Investing £20,000 in a taxable account versus an ISA could cost you £4,000+ in taxes on gains over 20 years. Use ISAs and pensions to shelter returns.
6. Following Hot Tips: Individual stock picking is incredibly risky. 80% of active fund managers underperform index funds. Unless you're a professional analyst, stick to diversified index funds.
7. Not Having an Emergency Fund First: Before investing, save 3-6 months of expenses in an accessible Cash ISA. Never invest money you might need in the next 5 years - market crashes can take years to recover from.
8. Assuming Past Performance Guarantees Future Results: Just because the market averaged 8% for the last 50 years doesn't guarantee the next 50 years. Build conservative projections and be prepared for volatility.
An investment calculator is a financial tool that projects the future value of your investments based on initial deposits, regular contributions, expected rate of return, and time horizon. It uses the compound interest formula to show how your money can grow over time through the power of compounding - where your investment returns generate their own returns.
Our UK-focused calculator is specifically designed for British investors, incorporating ISA allowances, realistic UK market returns, and tax considerations relevant to UK residents. It helps you plan for retirement, house deposits, children's education, or any long-term financial goal.
Compound interest is the mathematical phenomenon where investment returns generate their own returns. Unlike simple interest (which only earns on the principal), compound interest earns on both your original investment and all accumulated returns.
The Compound Interest Formula:
FV = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) - 1) / (r/n)]
Real Example: Invest £10,000 at 7% annual return. Year 1: £10,700. Year 2: You earn 7% on £10,700 (not just £10,000), giving £11,449. Year 3: 7% on £11,449 = £12,250. After 20 years: £38,697 - nearly 4x your initial investment without adding a penny!
When you add monthly contributions (e.g., £500/month), the compound effect becomes even more powerful. That same £10,000 initial investment + £500/month at 7% for 20 years grows to £273,028.
ISAs are tax-free investment wrappers that every UK resident aged 18+ can use. The 2025/26 allowance is £20,000 per tax year (April 6 - April 5).
Tax Benefits: Zero capital gains tax, zero dividend tax, zero income tax on ISA investments. For a higher-rate taxpayer, this can save thousands per year compared to taxable investment accounts.
Workplace and personal pensions offer different tax treatment than ISAs:
Annual Allowance: £60,000 per year (including employer contributions). Tapers for high earners (£200k+).
Once you've maxed ISAs and pension allowances, taxable investment accounts (General Investment Accounts) are used. Tax implications:
The right investment mix depends on your age, goals, and risk tolerance. Here are evidence-based guidelines:
| Age Range | Stocks % | Bonds % | Expected Return | Rationale |
|---|---|---|---|---|
| 20-30 | 90-100% | 0-10% | 8-10% | Long time horizon = can weather volatility for maximum growth |
| 30-40 | 80-90% | 10-20% | 7-9% | Still aggressive but add some stability with bonds |
| 40-50 | 70-80% | 20-30% | 6-8% | Balanced approach - growth with reduced risk |
| 50-60 | 60-70% | 30-40% | 5-7% | Approaching retirement - protect accumulated wealth |
| 60+ | 40-60% | 40-60% | 4-6% | Income generation + capital preservation. Still need some growth for longevity |
The "120 minus age" rule: A simple guideline is to subtract your age from 120 to get your stock allocation. Example: Age 35 → 120 - 35 = 85% stocks, 15% bonds.
| Platform | Annual Fee | Best For | Key Features |
|---|---|---|---|
| Vanguard UK | 0.15% | Index fund investors | Lowest-cost index funds, ISA & SIPP available, simple interface |
| Hargreaves Lansdown | 0.45% | Active investors | Huge fund selection, excellent research, 24/7 support |
| AJ Bell | 0.25% | Regular investors | Good value, wide range, strong pension options |
| Trading 212 | 0% | DIY stock pickers | Commission-free trading, fractional shares, ISA available |
| Nutmeg | 0.45-0.75% | Hands-off investors | Robo-advisor, automatic rebalancing, socially responsible options |
The ISA allowance for the 2025/26 tax year is £20,000. This is the maximum you can save across all ISA types (Cash ISA, Stocks & Shares ISA, Lifetime ISA, Innovative Finance ISA) in a single tax year. Any investment growth within an ISA is completely tax-free.
Compound interest means you earn returns on both your initial investment and on the returns you've already earned. For example, if you invest £10,000 at 7% annual return, after year 1 you have £10,700. In year 2, you earn 7% on £10,700 (not just the original £10,000), giving you £11,449. This snowball effect becomes powerful over decades.
Historical UK stock market returns (FTSE 100) have averaged around 7-8% per year over long periods. Global equity index funds have averaged 8-10%. However, past performance doesn't guarantee future results. Conservative investors might use 5-6% for projections, while aggressive equity investors might use 8-10%. Always account for inflation when setting expectations.
Cash ISAs are safer but offer lower returns (typically 3-5% in 2025), suitable for short-term goals or emergency funds. Stocks & Shares ISAs have higher potential returns (7-10% historically) but come with risk and volatility, making them better for long-term goals (5+ years). Many investors use both: Cash ISA for emergency fund, S&S ISA for retirement savings.
A common rule is to save 15-20% of your gross income for retirement. For example, someone earning £40,000 should aim to invest £500-670/month (including employer pension contributions). Starting early makes a huge difference: investing £500/month from age 25 to 65 at 7% return could grow to over £1.2 million, while starting at 35 might only reach £600,000.
Yes! This calculator uses the standard compound interest formula used by financial advisors worldwide and is specifically tailored for UK investors with ISA-relevant examples, realistic UK market return assumptions, and tax considerations. Results are projections based on consistent returns - actual returns will vary year to year.
Expert Reviewed — This calculator is reviewed by our team of financial experts and updated regularly with the latest UK tax rates and regulations. Last verified: January 2026.
Last updated: January 2026 | Verified with latest UK rates
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