This page explains how the calculator arrives at its result. Everything happens in your own browser.
Compounding every month
The calculator works month by month. The expected annual return is divided by 12: 6% a year becomes 0.5% a month. Each month the balance grows by that percentage, and earlier growth grows along with it. As a result, 6% a year works out to about 6.17% a year in the calculator.
Contributions
The starting amount is there from the beginning. The monthly contribution is added at the end of each month and starts growing the month after. Example: with €5,000 to start and €500 a month, the balance after the first month is €5,000 × 1.005 + €500 = €5,525.
If you choose a yearly increase, the monthly contribution rises once a year by that percentage. At 2%, €500 becomes €510 a month in the second year. Amounts are rounded to whole cents every month.
Fund costs (TER)
A fund’s ongoing costs (TER) come off the return, also month by month. At a 6% return and 0.14% costs, the balance grows by (6% − 0.14%) / 12, about 0.488% a month, instead of 0.5%. Gross is the balance without fund costs, net the balance after costs. The difference between the two is the fee drag.
The costs of the listed funds come from the fund providers’ documents, such as the factsheet. If you choose ‘Enter your own costs’, you fill in a TER yourself.
A worked example
With the default settings (€5,000 start, €500 a month, 25 years, 6% gross a year, 0.14% costs) you put in €155,000 in total. Gross, that grows to about €368,822; net, to about €360,688. The fee drag is about €8,134: 3.8% of the gross return of about €213,822.
The band
The band shows the net balance at 2 percentage points more or less return: an illustration of uncertainty, not a forecast. In the example it runs from about €265,030 (4% a year) to about €500,282 (8% a year). The lower edge never assumes less than a 0% return before costs.
What is not included
Amounts are not adjusted for inflation. No taxes (such as the Dutch Box 3), transaction costs or dividend withholding tax. The return is the same every month in the calculator; real returns vary and can be negative.