How does the ETF Savings Plan Calculator work?
The plan compounds monthly at the net return (return minus TER). Formula: Final = Initial · (1 + i)n + Rate · ((1 + i)n − 1) / i with monthly rate i = (return − TER) / 100 / 12 and number of months n = years · 12. You contributed Initial + Rate · n, the gain is Final − Contributed, and the TER cost is the difference from the value without TER.
Background & details
How to read the result
The final value is what your portfolio is worth at the end of the term. Alongside it you see how much you contributed yourself, the pure gain (final value minus contributions), and the cost from the TER. That last figure shows how much return the ongoing fund fees cost you over the years – a line many people underestimate.
What a realistic return looks like
A broadly diversified world ETF (for example tracking the MSCI World or FTSE All-World) has historically returned roughly 6 to 8% a year on average – over long horizons and after sharp swings. Plan with 5 to 7% as your assumption; anything higher is possible but not a reliable planning figure. Crucially, that is an average. Individual years can be deeply negative, which hurts most just before the term ends.
Putting the TER in context
- 0.1–0.2%: typical cheap world ETFs – the cost drag is minimal.
- 0.3–0.5%: many thematic or sector ETFs.
- above 1%: usually actively managed funds. Over 20+ years this eats a sizeable slice of the gain.
Also note the TER does not capture every cost: internal trading costs and spreads sit on top and are not reflected in the calculator.
Common mistakes
The biggest is a high, smooth return with no buffer – reality fluctuates. Tax is also often forgotten: in most countries, capital gains and distributions are taxable once any allowance is used up. The final value here is before tax and before inflation. And selling in the middle of a downturn locks in the current price, not the smoothed average.
When to use it
Ideal for long-term savings-plan planning with a steady contribution – the cost-averaging effect and the fee drag are handled cleanly. For a pure lump sum with no monthly contribution, the compound-interest calculator is enough. To see what the final value is worth in today's purchasing power, combine the result with the inflation calculator.