Calculate the projected growth of your investment portfolio. Add regular contributions, choose your expected return rate and see your wealth over time.
| Year | Portfolio Value | Contributions | Growth |
|---|
Choosing the right tax wrapper is one of the most important investment decisions you can make. Over a long time horizon, tax-efficient wrappers can add tens of thousands of pounds to your final pot.
| Wrapper | Annual Limit 2025/26 | Tax on Growth | Tax on Withdrawal | Access Age |
|---|---|---|---|---|
| ISA | £20,000 | None | None (fully tax-free) | Any age |
| SIPP | £60,000 (Annual Allowance) | None | 25% tax-free; rest taxed as income | 57 (from 2028) |
| GIA | No limit | CGT on gains >£3,000; dividend tax on dividends >£500 | None (but CGT may apply on sale) | Any age |
A seemingly small difference in annual charges has a massive impact over decades due to compounding. This is why passive index funds with low OCFs are favoured by evidence-based investors.
| Annual Charge | Typical Product | £50,000 After 30 Years (7% Gross) | Difference vs 0% Charge |
|---|---|---|---|
| 0.1% | Passive index fund (e.g. Vanguard, iShares) | £373,345 | −£7,268 |
| 0.5% | Low-cost platform + tracker | £348,988 | −£31,625 |
| 1.0% | Active fund | £315,540 | −£65,073 |
| 1.5% | Financial adviser + active fund | £285,450 | −£95,163 |
Historically, a globally diversified equity portfolio has returned around 7–10% per year before inflation. After inflation (roughly 2–3%), real returns are 4–7%. A balanced portfolio (60% equity / 40% bonds) typically returns 5–7% nominal. Your personal expected return depends on your asset allocation, fund choices, and risk tolerance.
An ISA shelters all growth and income from tax. A SIPP gives upfront tax relief on contributions (20–45%) but growth accumulates tax-free; withdrawals are taxed as income. A GIA has no tax wrapper — gains above the annual CGT allowance (£3,000 from 2024/25) are taxed at 18% or 24%.
Even a 1% annual management charge has a dramatic long-term effect. On a £50,000 portfolio growing at 7% over 30 years: with 0% charge the pot reaches £380,613; with a 1% charge it reaches £315,540 — a difference of nearly £65,000. Minimising charges is one of the most powerful levers available to investors.
With no starting balance, 7% annual return, and 30 years: you need to invest approximately £820/month. With a £50,000 starting pot, you'd need around £510/month. Starting early makes an enormous difference — every decade you start earlier roughly halves the required monthly contribution.
Pound cost averaging means investing a fixed amount regularly regardless of market conditions. When prices are high you buy fewer units; when prices fall you buy more. Over time this smooths out market volatility and typically produces better results than trying to time the market.
In 2025/26, the annual ISA allowance is £20,000 per person. You can split this across a Cash ISA, Stocks and Shares ISA, Innovative Finance ISA, and Lifetime ISA (max £4,000). All growth, interest, and dividends within an ISA are permanently sheltered from tax — even when you withdraw.
An Ongoing Charges Figure (OCF) is the total annual cost of a fund. Passive index trackers typically charge 0.05–0.25%, while active funds charge 0.5–1.5%. Platform charges add another 0.15–0.45%. A total cost of under 0.5% per year is generally considered good value.
In 2025/26, the annual CGT exemption is £3,000. Gains above this are taxed at 18% (basic rate) or 24% (higher/additional rate). Dividend income above the £500 dividend allowance is taxed at 8.75% (basic) or 33.75% (higher rate).
Generally, higher-rate taxpayers should maximise SIPP first (40%+ tax relief). Basic-rate taxpayers get 20% SIPP relief — still valuable, but access is restricted until at least age 57. ISA offers more flexibility. If you need access before retirement, ISA wins.
The 4% rule suggests you can withdraw 4% of your portfolio in year one of retirement, then adjust for inflation each year, with a high probability of not running out over 30 years. For a £1 million portfolio, that's £40,000/year. Many UK planners now use 3–3.5% as a more conservative guideline.
Inflation erodes purchasing power. At 2.5% average inflation, £1,000 today will only buy what £610 buys today in 20 years. Always view projections in both nominal and real (inflation-adjusted) terms. A nominal value of £500,000 in 25 years has the spending power of roughly £268,000 in today's money.
CAGR (Compound Annual Growth Rate) is the smooth annualised return that accounts for compounding. Average annual return is the arithmetic mean of yearly returns and is always higher than CAGR when returns vary. For projections, CAGR is the correct metric to use as it reflects actual end-value growth.