1 · One month of growth
A yearly rate has to be cut into twelve equal pieces that multiply back up to the year. Not division — the twelfth root.
Twelve of these multiplied together give exactly the yearly rate back.
After 20 years R 0.00 You put in R 0.00 Growth did R 0.00 In today's money R 0.00
Your assumptions
Five numbers. The contribution is paid on the first day of every month, so it earns growth from that month onwards.
Where every number comes from
Nothing below is hidden in a black box. These are the same formulas the table underneath is built from, with your numbers already filled in.
The formula renderer did not load, so the notation below is shown as plain text.
2 · The rule, every month
The contribution goes in first, then the whole balance grows. That is what “paid at the start of the month” means, and it is worth one extra month of growth on every contribution.
3 · The very first month
Your numbers, in that rule, for month one.
4 · Skipping to the end
Applying the rule 240 times in a row collapses into one line — the starting amount compounded, plus an annuity-due of the contributions.
The long way and the short way agree: this is the same figure as the last closing balance in the table. Past about a trillion rand the two can part by a cent — that is the computer's limit, not the arithmetic's.
5 · What it is worth in today's money
Inflation is not mixed into the monthly growth. It is applied once, at the end of each year, to that year's closing balance.
6 · Yours versus the growth
How much of the final figure you handed over yourself, and how much arrived on its own.
Step by step
Tap any row in the table below and this block follows it.
Year by year
Nothing is rounded on the way through. Balances are carried at full precision and rounded only where they are printed, so twelve months of growth land exactly on the yearly rate rather than a cent under it. Open a year to see the twelve months inside it.
Narrow screen — some columns are folded away to keep the table on the page. Tap any row for the full breakdown.
| Period | Opening (R) | Paid in (R) | Growth (R) | Closing (R) | Today's money (R) |
|---|---|---|---|---|---|
| Total |
What this calculator is doing
It adds the contribution at the start of each month, applies one month of growth to the whole balance and repeats. The same assumed rate is used every month because arithmetic needs a tidy line, even though markets do not provide one.
Five inputs, one model
- Starting value is the amount already invested before month one.
- Monthly contribution is added on the first day of every month, so each payment receives that month’s growth.
- Growth rate is an assumed effective annual return. The calculator takes its twelfth root to find an equivalent monthly factor.
- Period controls how many monthly cycles are run.
- Inflation does not change the nominal balance. It translates each year-end value into an estimate of today’s buying power.
R500 a month for 40 years
Assume no starting amount, R500 paid at the start of every month, a steady 9% effective annual return and 5% inflation. Over 40 years you contribute R240 000. The arithmetic produces a nominal final value of about R2.12 million, of which roughly R1.88 million is modelled growth.
At 5% inflation, that final amount has estimated buying power of about R302 000 in today’s money. That is not a forecast. It is what these particular assumptions do when repeated without interruption.
Nominal is not the same as real
Nominal value is the number of future rands. Real value tries to answer a different question: what could those future rands buy if prices rise at the inflation rate you entered? A large nominal result can look much smaller after several decades of inflation because each future rand buys less.
Why the assumption matters so much
Compounding magnifies small differences when there are hundreds of months. Changing the return by one percentage point does not change only the final month; it changes the growth earned on earlier growth all the way through. That is useful for comparing scenarios and dangerous when one scenario is mistaken for a promise.
What this leaves out
- Volatility: real returns rise and fall instead of arriving smoothly.
- Sequence of returns: the order of good and bad years matters, especially when money is withdrawn.
- Fees: the tool does not deduct a product fee; use a return already reduced by the fee assumption you want to test.
- Tax: different accounts and investments can be taxed differently.
- Missed or changing contributions: the model uses the same monthly amount throughout.
- Product rules: minimums, limits, access conditions and compounding conventions differ.
The honest use of this calculator
Try several plausible returns and inflation rates. Pay attention to the range, the contribution total and the effect of time. The calculator recommends no investment and guarantees no return; it only makes the assumptions visible.