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An assumed return is not a market forecast
Updated 4 November 2026 · Educational content
A calculator needs an input for growth. An investment does not promise to deliver that input. The 10% starting rate approximates the S&P 500’s long-term historical annualised total return with dividends reinvested. It supports the “what if I invested instead?” comparison; it does not promise that future investments will achieve the same result. See our benchmark source and assumptions.
Why there is no single “stock market return”
A quoted historical average depends on the market index, start and end dates, currency, whether dividends are reinvested and whether the figure is adjusted for inflation. An arithmetic average and a compound annual growth rate also measure different things. A precise percentage without that context can create false confidence.
Markets do not move in a straight line
A constant-rate model hides volatility. An account can fall sharply even if its long-term average eventually looks positive. If you need to withdraw during a fall, the timing matters. With regular contributions or withdrawals, the order of returns also affects the final balance.
One company is different from a diversified portfolio
Buying one company's shares exposes you to that company's fortunes. Spreading investments across businesses, sectors and asset types can reduce concentration risk. Diversification still cannot guarantee a profit or prevent every loss. A narrowly focused fund may also leave you concentrated in one sector.
The Investor.gov guide to asset allocation explains how time horizon, risk tolerance and diversification fit together. These considerations are outside the scope of this calculator.
Money needed soon calls for a different comparison
A long-term investment scenario should not be treated as a substitute for money needed for rent, bills or an imminent purchase. Think about access to cash, existing borrowing and how you would handle a loss before making a real decision. The FCA's investing preparation guide offers a useful starting framework.
Use several scenarios
Try 0%, 3% and 7%, and a negative rate as well. Those inputs do not define the full range of possible outcomes: a real loss could be much worse. The purpose is to see how sensitive the result is to an assumption you cannot know in advance.
Return to the calculator or explore inflation, fees and taxes.