ETF Savings Plan Calculator
The calculator shows how a monthly contribution grows at a fixed annual return. The inputs are a lump sum, the monthly amount, the number of years, the expected return and the fund’s ongoing costs.
How the Calculation Works
The calculator first subtracts the expense ratio (TER) from the return. A 7% return with a 0.2% TER becomes 6.8% a year. It then converts that annual figure into an equivalent monthly rate: (1 + 0.068)^(1/12) − 1, or about 0.55% a month.
Each month, the existing balance grows by that monthly rate, and then the contribution is added. So each payment goes in at the end of the month and starts earning from the following month. A lump sum is invested from the first month. The chart shows, for every year, how much has been paid in and what the portfolio is worth. The gap between the two is compound growth.
Worked Examples
All examples assume €200 a month and no lump sum.
| Assumption | Paid in | Final value | Gain |
|---|---|---|---|
| 20 years, 7% return, 0.2% TER | €48,000 | €99,232 | €51,232 |
| 20 years, 7% return, 1.0% TER | €48,000 | €90,688 | €42,688 |
| 20 years, 5% return, 0.2% TER | €48,000 | €79,396 | €31,396 |
| 10 years, 7% return, 0.2% TER | €24,000 | €33,859 | €9,859 |
| 30 years, 7% return, 0.2% TER | €72,000 | €225,445 | €153,445 |
Two things stand out. Time matters more than any other input: going from 10 to 20 years lifts the final value from €33,859 to €99,232, almost three times as much, while the amount paid in only doubles. Costs also add up over long periods. An extra 0.8 percentage points of TER costs €8,544 after 20 years and €30,542 after 30 years.
The 7% is an assumption for the example, not a forecast. The return triangle shows, from our price series, the annual returns the major US stock indices delivered for every past buy and sell year.
Which Investments Compound?
Compounding happens when returns stay invested and earn returns themselves. With deposits that is the interest, with stocks and ETFs the dividends. Accumulating ETFs reinvest them without any action, distributing ones pay them into the account, where the effect only shows if the money goes back to work. Price gains are not compound interest, even though they add up in a similar way: they depend on the price, not on a payout. How much this carries over decades is what the calculator above shows, and the German pre-payment levy on accumulating funds is covered in ETF taxes .
What the Calculator Leaves Out
- Volatility. The return is the same every month. Real prices move around, and a crash shortly before the end hits the largest balance. The Monte Carlo simulation shows how widely outcomes spread when returns vary.
- Taxes. Capital gains tax on sale and Germany’s annual advance lump-sum tax (Vorabpauschale) on accumulating funds are not deducted. The Vorabpauschale calculator estimates the latter.
- Inflation. All amounts are nominal. The real return calculator shows what €99,232 in 20 years would buy in today’s money.
- Order fees. Many brokers run savings plans for free, some do not. Such fees are not part of the TER. The article on ETF fees explains the full cost picture.
- Distributions. The calculator assumes income stays in the fund and keeps growing. With a distributing fund, that only holds if the payouts are reinvested.
The withdrawal plan calculator works out how the saved capital can later turn into a monthly payout.
