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However, there are a number of points to note. First of all neither calculator takes taxation into account. As everyone has a different tax situation and the tax regime alters over time, it would be hard to model this into the calculator. If you invest in an ISA then your investments have the opportunity to grow free from tax. You also get tax-protection in a pension plan but, currently, you are taxed on your pension when you start to draw from it.
What rate of return should you use?
It's important to be realistic about what rate of return you expect from your investments. Over the last 80 years the UK stock market has averaged 12% a year. If you want to be conservative you should assume a return lower than this rate. Arguably the world's greatest investor, Warren Buffett, has achieved a long-term growth rate in the low 20%'s. Although you might do better than this over short periods, it is very unlikely that you will match this rate of growth over the long-term.
Don't forget you still need to consider the costs of investing. In a plain-vanilla index tracker these could be 1% a year, bringing your net expected return down from 12% to 11%, if you used the historical rate of growth as a starting point. In other types of unit trusts they could be 2% or even higher.
In addition, after almost 20 years of strong growth from the stock market many people expect the next 20 to be less generous. The Financial Services Authority has specified that when investment companies provide figures like pension projections the three rates of 4%, 6% and 8% should be used to illustrate how the investments might grow. Using a range of rates is an excellent way to providing a sensible range for your expectations, rather than one number.
What about inflation?
The 12% return quoted above is what is known as the nominal rate. After the effects of inflation the 'real' rate of return has been 8%, as inflation has averaged around 4% over this time. If you want to use the calculators to compare like with like, i.e. spending power now versus spending power in the future, you should use a real rate.
Currently, inflation is lower than the 4% average at around 2%. This is one of the reasons why lower nominal rates are expected in the future. If inflation continued at 2% and the real return was 8% this would translate into a nominal rate of 10%.
Calculator 1 - How will your savings grow | Calculator 2 - How much do you need to save