Investment calculator with inflation
Future value of an investment and what it is really worth after inflation.
Calculator inputs
Results
Enter your values and press “Calculate” to see the result.
In short
- What it calculates
- Future value of an investment and what it is really worth after inflation.
- Formula used
FV = C × (1 + r)ᵗ + A × [((1 + r)ᵗ − 1) / r]- Example
- £20,000 at 7% over 20 years with 2.5% inflation:
Investment calculator
An investment returning 7% with 2.5% inflation does not make you 7% richer: it makes you 4.4% richer in purchasing power.
This calculator shows both figures, nominal and real, so the big number does not mislead you.
How it works
The capital compounds at the given return over the horizon. Annual contributions are treated as a constant annuity.
The result is then divided by the accumulated inflation factor to express it in today's money.
Formula
FV = C × (1 + r)ᵗ + A × [((1 + r)ᵗ − 1) / r]
Real value = FV / (1 + f)ᵗ
r = return, f = inflation, t = years
Worked example
£20,000 at 7% over 20 years with 2.5% inflation:
Nominal value: £77,394
Real value: £47,245
Inflation takes more than £30,000 of purchasing power.
Explanation
Past returns do not predict future ones
It is the mandatory warning on every financial brochure, and it is not a formality. A projection with a fixed return draws a smooth line that no real market follows: good and bad years alternate, and the order they arrive in matters a great deal if funds are being withdrawn.
Fees eat more than they appear to
An annual fee of one and a half per cent on a fund returning seven looks small. Over thirty years that difference can cut more than a third off the final capital, because the fee compounds too. Comparing products by total annual cost matters as much as looking at returns.
Sequence risk
Two portfolios with the same average return can end up very differently if one suffers its falls early and the other late, whenever there are contributions or withdrawals along the way. It is why people approaching retirement usually reduce exposure.
This is not advice
The tool projects arithmetic scenarios. It does not know your situation, your horizon or your risk tolerance, and it does not replace a registered professional.
Frequently asked questions
What return should I enter?
Whatever you realistically expect. Broad equity indices have historically returned around 7% nominal per year over the long run, but past performance does not guarantee future results.
Why is the real value so much lower?
Because compounded inflation over 20 years multiplies prices by 1.64. The same money buys considerably less.
How much do fees cost over the long term?
More than the annual percentage suggests, because they compound too. One and a half points a year can mean a third less capital over thirty years.
Why does the order of good and bad years matter?
Because with contributions or withdrawals, an early or late fall changes the final result even when the average return is identical.
Need to calculate something else?
These tools are often used alongside this calculator.
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