SIPP Growth calculation

Retirebefore50

cfw1994 said:

Thrugelmir said:

Retirebefore50 said:

Does that look correct?. If yes I'll be very happy 😀

Markets rarely move upwards in a linear fashion unfortunately. 

A cheerful submission to the thread, as always….accurate, yes, undeniably……but needs more explanation, I would suggest…

What Thrugelmir perhaps failed to add:

OP, 3% is a broadly very reasonable average growth rate to assume over a long period.  

As the period shortens, however, so there is the possibility that the gain to be larger, smaller or indeed negative.  

To see this on display, as an example, take a look at Vanguard LS100: click the ‘performance’ tab and see how the cumulative performance happily went up over the 5 year period, but if you look below at the ‘discrete performance’ figured, you see that the valued dropped 1.3% for the 12-24 month period:



This is why many might prefer money they could need during their immediate 1-5yr future to be kept in cash (eg premium bonds), even though in the long term, cash ‘assets’ (savings) are eroded over the long term by inflation.

If you google ‘average stock market growth’, you will find the past century saw returns averaging 10%…..but that isn’t the window you are working to!

ETA: decent read on this topic on the Motley Fool here 👍
hope this helps! 

Thanks @cfw1994 I'll review the links given. The 3% was after fees, I didn't factor inflation. I have however put contributions on the low end, they are likely to be double this figure. I pay £700 by DDs and lump sums normally in Dec (near the company year end) and March (personal tax year end). Last year was approx £28k and year before £17k, prior year £38k (had a good year)...depends on the cash/profits and how much cash I want to leave in the business (normally 12 to 24 months wages/personal outgoings).

I also have ISAs with a few good shares/funds (e.g. AMD, Nvidia, FCEL L&G US index - these have helped double one of my ISAs where no contributions have been made in a few years) so hopefully they will increase over the next 7 to 10 years. Again for these I used 3% growth and significantly less contributions (around 1/3rd than I would normally make). 

Hopefully it balances out. 

Thrugelmir

cfw1994 said:

Thrugelmir said:

Retirebefore50 said:

Does that look correct?. If yes I'll be very happy 😀

Markets rarely move upwards in a linear fashion unfortunately. 

A cheerful submission to the thread, as always….accurate, yes, undeniably……but needs more explanation, I would suggest…

Better to invest on the basis of fact than supposition.  There's decades of data available for all the major markets if one wishes to perform what if scenarios.