Forcasting Stock ISA growth

docap

Is there a formula I can use to forcast how much my ISA might be worth in the future if I continue to pay a fixed amount in over 25 years?

Someone told me they could do it - but did not elaborate.

Eg. £5000 currently in stocks ISA. If I continue to pay in £4000 over the course of a year, for 25 years, assuming a 7% annual growth (?too much), how much will it be worth in 25 years allowing for compound interest?

dunstonh

Is there a formula I can use to forcast how much my ISA might be worth in the future if I continue to pay a fixed amount in over 25 years?

Obviously its guess work but there are different ways of doing it.

Some use the simple approach of using 5% for a low risk portfolio, 7% for medium and 9% for high risk.

Another way is to look at a stochastic projection based on the underlying investments and assuming they perform in line with their expectations. You tend to find these on a graph showing a grid of around 80% chance of being within that band and 50% in a wider band with the median shown as a line. Hard to explain without actually seeing it but most investment specialist IFAs have access to the sort of software that can turn out stochastic projections. as well as simple.

Eg. £5000 currently in stocks ISA. If I continue to pay in £4000 over the course of a year, for 25 years, assuming a 7% annual growth (?too much), how much will it be worth in 25 years allowing for compound interest?

£5000 lump sum would be worth £27,137
regular (£333.33pm) would be worth £262,485

That assumes 7% after charges. Whether 7% before charges is realistic depends on the investments within the portfolio.