A small example
If £100 grows by 5% in one year it becomes £105. Another 5% grows that to £110.25, because the second year’s growth is calculated on £105. This is compounding. The example assumes a steady return and ignores fees and tax; it is not a forecast.
Contributions do much of the work
Adding money regularly changes the picture. Some of the future balance is money you contributed and some is growth or loss. Our calculator separates the two so that a large total is not confused with a large investment profit.
Inflation changes what the total means
A future pound may buy less than a pound today. Dividing the future total by an assumed inflation factor gives an estimate of today’s spending power. This is still an illustration: nobody knows the inflation rate over your child’s full saving horizon.
Charges compound too
A charge reduces the money that remains invested and therefore the base on which future growth can build. Our calculator applies the annual fee as a separate drag on the assumed annual return. It does not model provider-specific dealing fees or tax.
Read a chart critically
Check whether contributions continue for the whole period, when payments are made, whether tax relief is included and whether the total is before or after fees and inflation. Compare like with like. Our illustration uses end-of-month payments, constant assumptions and no pension tax relief.
This guide explains general options, not what is right for your family. Investments can lose value. Tax rules and account terms can change. For personal recommendations, speak to a regulated financial adviser.
Sources & further reading
Core rules checked against the following sources on 28 October 2026. Check current terms before acting.
How we approach our guides
