How this calculator works
The calculator uses the standard future-value-of-an-annuity formula, applied monthly:
- Your monthly contribution is invested at the start of each month.
- Your expected annual return is converted to a monthly rate and compounded each month.
- Any initial lump sum grows separately under the same compounding assumption and is added to the total.
- Total invested is simply your contributions added up — it does not include any growth.
- Wealth gained is the difference between your estimated future value and your total invested — this is what compounding has added.
Small differences in assumed annual return compound dramatically over long periods. Try running the calculator at 5%, 7%, and 9% for the same monthly amount and time horizon — the gap in outcomes widens the longer the time frame. This is also why starting early, even with a small amount, tends to matter more than trying to time the market later.
Turning this into a real investment plan
A SIP-style approach works best when it's automated — set up a recurring transfer into an investment account so contributions happen whether or not you remember. For Gulf-based expats, robo-advisors and self-directed platforms both support recurring monthly investing into diversified portfolios. Our best investment platforms for Gulf expats guide compares the main options, and if you're not sure where to begin, how to start investing from the UAE walks through the first steps.
Sarwa offers diversified, low-minimum portfolios with automated recurring deposits — a simple way to put a SIP-style plan like this into practice.
Frequently asked questions
SIP stands for Systematic Investment Plan — a strategy of investing a fixed amount on a regular schedule (typically monthly) regardless of market conditions. It's a popular approach because it builds discipline, smooths out the impact of market timing through "pound/dollar-cost averaging," and is easy to automate.
There's no universally "correct" number — it depends on your portfolio's asset mix and risk level. Diversified global equity portfolios have historically returned roughly 6-8% per year on average over long periods (before inflation), while more conservative bond-heavy portfolios have typically returned less. We'd suggest running a few scenarios (e.g. 5%, 7%, 9%) rather than relying on a single figure, since future returns are never guaranteed.
No. This calculator shows a simplified, pre-fee, pre-tax, nominal (not inflation-adjusted) projection. Platform fees, fund expense ratios, and your home country's tax treatment of investment gains can all affect your real-world outcome — sometimes significantly over long periods. Treat the result as a starting point for comparison, not a final number.
Monthly compounding is a common simplifying assumption for SIP-style calculators and is reasonably close to how a diversified portfolio that's regularly reinvesting dividends and gains behaves over time. Actual returns won't be smooth month to month — they'll be volatile in the short term but may average out closer to your assumed rate over many years.