How the calculations work

What “in real terms” means

A balance can rise while buying less. Wosavest therefore separates returns before inflation from returns after inflation. A real return means the return after inflation: the estimated change in what the money can buy. The calculator uses the visitor’s editable annual inflation assumption as a common yardstick for expressing future amounts in today’s purchasing power. It does not claim that this rate will match the exact change in that person’s spending.

The calculator converts between a real return and its matching return before inflation using:

return before inflation = (1 + real return) × (1 + inflation) − 1

The conversion keeps the investment and spending projection in the same units. The result is still an assumption, not a prediction.

Inflation and your own spending are different

Within this calculator, inflation is the editable rate used to translate future nominal amounts into today’s purchasing power. A published consumer-price index can be a useful starting reference, but it measures the changing price of a defined basket for a population. It does not measure the exact change in any one household’s costs.

Your spending may rise faster or slower because the things you buy and your circumstances change. Rent, childcare, health, travel and lifestyle can move very differently from a broad price index. The quick calculator makes the simplifying assumption that cash income and spending rise with the chosen inflation rate, so both remain constant in today’s money. This is a consistent basis for the comparison, not a forecast of personal spending.

The word inflation is also used differently across economic traditions, including definitions focused on changes in the money supply. Wosavest does not ask the visitor to adopt one economic theory. The field means only the rate used by this calculation to convert between returns before inflation and returns in today’s purchasing power. It is always visible and editable.

Starting assumptions for savings and investments

Every starting figure is visible and editable. The saved plan offers broad investment categories with editable assumptions. Simple public examples use 4.75% a year after inflation and investment costs, before personal tax.

• Cash that pays no interest: 0% a year before inflation. Its expected real return is therefore below zero when prices rise.
• Interest-paying savings or a fixed-term deposit: 2% a year before inflation as an editable example. The rate shown by the visitor’s bank is better when known.
• Global government bonds: 1.7% a year after inflation. This is the annualised real return for worldwide bonds from 1900 to 2024 reported with the 2025 UBS Global Investment Returns Yearbook.
• World stock market index fund: 5.2% a year after inflation. This is the annualised real return for worldwide equities from 1900 to 2024 reported with the same Yearbook.

The historical figures describe a very long past period. They do not say what will happen next year, and they do not make returns smooth or dependable. Stocks and bonds can fall sharply, remain below a previous value for years, or produce results far from the average. The calculator derives a matching return before inflation from the visitor’s inflation assumption, then allows for the editable costs described below.

The 2026 Yearbook extends its database through 2025 and again identifies equities as the top-performing liquid asset over the complete record. Its public summary does not publish the updated return for the worldwide composite, so the calculator uses the latest publicly stated worldwide figures rather than guessing a newer number.

Cambridge Judge Business School, worldwide results from the 2025 UBS Global Investment Returns Yearbook · UBS Global Investment Returns Yearbook 2026

Fund fees and tax withheld inside a fund

The world stock market index fund example starts with a 0.19% annual fund fee. This matches the ongoing charge announced for Vanguard’s FTSE All-World UCITS ETF from 7 October 2025. It is only a practical example. A visitor should replace it with the fee for their own fund.

The example also allows for an estimated 0.23% of the fund’s value lost each year to dividend tax inside the fund. This means 0.23 percentage points of fund value, not 23%. It is not the investor’s personal dividend tax. It is tax that countries may withhold when companies pay dividends to an Irish fund, before the fund reinvests or distributes the money.

The estimate comes from Vanguard Funds plc’s audited year to 30 June 2025. The FTSE All-World UCITS ETF reported USD 681,582,910 of dividend income and USD 78,871,274 of current income withholding tax. Dividing the tax by the dividend income gives an effective withholding rate of 11.57% on those dividends:

78,871,274 ÷ 681,582,910 = 11.57%

The fund’s net assets were USD 27,231,939,274 at the start of the year and USD 42,324,686,694 at the end. Their simple average was USD 34,778,312,984. Dividend income was therefore about 1.96% of estimated average assets:

681,582,910 ÷ 34,778,312,984 = 1.96%

Applying an 11.57% withholding rate to a dividend yield of about 1.96% produces an estimated drag of 0.227% of assets, rounded to 0.23%:

11.57% × 1.96% = 0.227%

This is an approximation from one fund over one financial year. It is not a universal rate, and it is not a basic figure that a visitor must know or enter to use the free calculator. The actual loss varies with the fund’s country of registration, the countries and companies it owns, tax treaties, dividend yields and tax reclaims. Detailed tools can expose the assumption for people who want to inspect or replace it.

These deductions must not be counted twice. Published returns for an investable fund will normally already reflect costs paid inside that fund, including its ongoing charges and internal withholding, although the exact presentation should be checked in the fund documents. When starting from that fund’s reported performance, the visitor should not subtract the same costs again. The separate fields are intended for a starting return, such as a broad historical market return, that does not already include the costs of the product being modelled.

Vanguard’s 2025 fee announcement · Vanguard Funds plc Annual Report, 30 June 2025

Four figures that should not be mixed together

When interpreting a projection, distinguish these four parts:

• Cash surplus: net cash income minus living spending and other cash outgoings. Investment price changes are not included here because they are not regular cash pay.
• Expected real return on investments already owned: the estimated change in purchasing power produced by the savings and investments entered at the start, after inflation and the editable costs.
• Return effect of money added or withdrawn: the extra return earned as monthly savings are invested during the year, or the return no longer earned when investments must be sold to cover a cash shortfall.
• Expected change in savings and investments: cash surplus plus both investment-return components. The saved plan also tracks debts and their payments.

For example, with $2,000 in the world stock market category, the default costs and a 2.5% inflation assumption give a displayed planning rate of about 4.78% real. The return on the money already owned is about $96. If the same person adds $100 at the end of each month, those contributions begin earning at different times and add about $24 more during the first year. In this illustration, their combined unrounded return is about $119, so the rounded components may not add to the rounded total. The engine keeps the unrounded rate for its calculations. The articles and simple world-index illustrations consistently use 4.75% a year after inflation and investment costs, before personal tax. This is the shared rounded illustration assumption. The detailed calculator applies its separate return, fee, internal withholding and inflation inputs without rounding them to that figure; with the starting inputs above, its result is about 4.78%. Personal tax, when enabled, is applied separately.

This matters when someone earns 30,000, spends 30,000 and has investments expected to add 10,000 in real terms. Their cash surplus is zero, but their savings and investments are still expected to rise by 10,000. That investment return is much less stable than a salary or contracted rent. It may be negative in any particular year, so the site never presents it as guaranteed income.

How the expected investment return is calculated

For each investment, the model starts with its editable return before inflation, subtracts the effect of its annual fund fee and any estimated internal dividend-withholding drag, then converts the result into today’s purchasing power.

expected real investment return = value × (((1 + return before inflation) × (1 − fee) − internal withholding drag) ÷ (1 + inflation) − 1)

This simplified planning model treats the figures as annual rates. It cannot reproduce the exact timing of dividends, fees or tax inside every product.

All asset growth versus money available for spending

In a saved plan, net worth includes recorded assets minus debts. An asset can grow in the model while remaining unavailable to pay bills, for example because you excluded it from spending, locked it until a later age or marked it as difficult to sell.

The timeline therefore separates expected growth across all assets from expected returns available for spending. Total growth uses each asset's saved return, fees and modeled tax on dividends or interest, before withdrawals and any future tax on a sale. It can be negative. Spending capacity also respects your access settings and modeled sale taxes.

The available-assets line and the holdings breakdown help explain the difference. If the model can no longer fund required payments, its line stops there. A larger total net worth does not by itself mean the plan can keep paying its expenses.

How tracked collections are valued

A tracked collection uses recorded purchases minus recorded sales by default. This includes its subcategories and linked collection transactions. For example, $1,000 of purchases and $250 of sales give an automatic value of $750. Editing or removing a movement updates that amount.

This is a record-based planning value, not an estimate of what a buyer would pay. You can explicitly choose a manual market estimate instead. If sale proceeds exceed purchases, net investment is shown as negative but the collection's asset value is floored at zero. Missing currency conversions must be resolved before relying on the total.

Sale proceeds do not establish the purchase cost of the items still owned. Return assumptions and permission to sell the collection for living expenses are separate settings.

Personal tax and acquisition cost

Projections are before personal tax by default. Previously saved manual flat-rate tax simulations remain available for continuity. They can apply entered rates to distributions and realised gains, but do not calculate tax brackets, allowances, deductions, loss offsets or a complete tax bill.

Purchase cost is also used to explain investment performance. Missing acquisition cost is not silently treated as zero. A country name is only a label: it does not determine tax residence or calculate that country’s taxes.

The financial projection

My future follows income, spending, assets and debts month by month. Amounts are shown in today’s purchasing power. Each investment uses its own assumptions; money left after spending follows the savings allocation you choose.

The timeline shows projected net worth and whether accessible money can fund your expenses. An asset can increase net worth while remaining unavailable for spending. Missing return assumptions use zero real growth temporarily; they do not prevent spending accessible capital.

Plan details also compares expected investment returns with living costs and scheduled debt payments. Reaching 100% is an estimated comparison, not a promise of steady returns or a recommendation to retire. Markets rise and fall; the smooth line illustrates assumptions.

Changing income, spending or future savings

In My future, temporary comparisons start from your saved plan. Change monthly income, total monthly spending or an expected return by category. Unchanged assumptions and the saved savings allocation remain in use. Save a scenario if you want to keep the comparison; trying it does not change your saved plan.

Recorded income and spending

A few transactions do not establish a reliable monthly pattern. The site uses only complete calendar months when calculating an average from recorded transactions. A manual estimate remains available and is often more useful until the person has several complete, representative months. Irregular income and exceptional expenses should be identified rather than allowed to distort the average.

Each account starts with a balance and a balance date. Transactions dated on or after that point are replayed when they are marked to update balances. An older movement can be stored for statistics only, so it is not subtracted twice from a current balance that already includes it.

Transfers and purchases do not count as consumer spending. Borrowing creates equal cash and debt entries. A debt payment reduces cash by the total payment, reduces debt by principal, and counts only its interest portion as spending.

What work really pays per hour

The cash calculation is:

(annual net salary + net bonuses − work-related costs) ÷ all job-required hours

Job-required hours include contracted work, unpaid overtime, commuting, preparation, calls, administrative tasks outside paid hours and other time that the job requires. Work-related costs can include commuting, extra childcare, uniforms, equipment and other spending that would not exist without the job. A separate figure may include benefits at the value the user personally assigns to them.

Paid overtime can be worth more than the headline hourly comparison suggests because many work costs are already fixed. One extra paid hour may add income without adding another monthly travel pass, uniform or full day of commuting. The calculator keeps those fixed and variable costs separate where the user provides them.

What a purchase really costs

In My future, open Compare a one-off expense. It compares your saved plan with and without the expense, using the same return, withdrawal and tax assumptions. Temporary changes tried elsewhere on the page are not included.

The main result is the difference in net worth today and after the number of years you choose. Spending leaves less capital invested. It may change when expected investment returns first cover costs, but if that date stays the same, the tool shows no delay.

For scale, the expense can also be compared with the plan’s expected annual net-worth growth. That ratio measures the size of the expense, not months of work lost or a postponement of your goal. If expected growth is not positive, no finite time equivalent is shown.

An optional comparison uses the hourly pay saved in Income plan. All future results depend on your assumptions and uncertain investment returns.

Relocation and other one-off decisions

A moving cost cannot be compared with annual savings by simple division. Money paid today could otherwise remain invested, while future savings arrive gradually. The scenario model removes the one-off cost when it occurs and then projects each future cash-flow difference using the same editable real return assumptions. A move is shown as financially ahead only when the projected net worth in the move scenario exceeds the projected net worth without the move.

Planning for spending from investments

The calculator and saved plan compare expected real investment returns directly with living costs and any modelled debt payments. Users choose the return assumptions, income and spending. Saved scenarios let them explore their own alternatives. The result does not add a separate margin or decide how much uncertainty a person should accept.

Any date based on expected returns is an illustration, not a safe retirement signal. Volatility, concentration, leverage, taxes, fees, liquidity and the order of good and bad years can make two portfolios with the same average return behave very differently.

Geographic exposure of stock-market investments

The geographic view is weighted by each investment’s current value. An individual share is assigned to the country where the underlying company is based. Its exchange country and trading currency are kept only as listing information and are not substituted for the company country.

This distinction is especially important for depositary receipts. An ADR that trades in the United States is assigned to the underlying company’s country once that country has been identified. It is not counted as American solely because of its trading venue.

The plan automatically searches Wikidata using only the public company name, ticker or ISIN. A proposed country is returned only when the company entity can be matched sufficiently closely and has one usable country, country of origin or headquarters country. Unambiguous company matches are saved with their source; manual corrections are preserved. The trading country is never used as a substitute, and ambiguous or missing results remain Unclassified. Wikidata is collaboratively maintained and may be incomplete or wrong, so the saved source remains visible and can be corrected manually.

A fund or ETF is divided using its reported country allocation. For example, a fund whose current value is 10,000 and whose allocation is 60% United States and 40% Japan contributes 6,000 and 4,000 to those countries respectively. Any part of the published breakdown that has not been entered remains visible as Unclassified. Country weights can change, so the view stores a source and reference date when they are available.

For a supported exact fund match, the plan obtains a dated geographic breakdown from iShares/BlackRock, State Street or Vanguard. When iShares supplies no country breakdown, the system can aggregate its published equity holdings by company location and holding weight. Securities-lending collateral is not used as investment exposure. The result is cached for 24 hours per fund across the installation. A matched Wikidata company result is cached for 30 days and an unsuccessful search for seven days. Other, cash, derivatives without a country and unrecognized locations are not spread across the recognized countries; they remain Unclassified. A previously saved allocation is kept when the issuer cannot be reached.

The result describes where the companies held directly or through funds are based. It does not measure the countries in which those companies earn revenue, employ people, own assets or face economic risks. Products without meaningful company-country exposure can be explicitly excluded.

Main-currency values

Balances entered manually are stored in the profile’s main currency. Changing that currency setting relabels those values; it does not convert them. When a connected closing price uses another supported currency, the valuation uses a dated European Central Bank reference rate. A manual exchange rate is required when the reference source does not cover the currency.

Sources

• European Central Bank, what is inflation?
• UK Office for National Statistics, household costs and personal inflation
• Cambridge Judge Business School, worldwide results from the 2025 UBS Global Investment Returns Yearbook
• UBS Global Investment Returns Yearbook 2026
• Vanguard, 2025 FTSE All-World UCITS ETF fee change
• Vanguard Funds plc Annual Report, 30 June 2025
• Wikidata data access and CC0 structured-data terms