Index Fund Calculator

This calculator backtests a blended portfolio of cash, bonds, a stock index, and (optionally) bitcoin against real historical annual returns. Pick a preset fund or build a custom blend, set a lump sum and an optional monthly contribution, choose a year range, and see what the blend would actually have grown to.

It is a backtest, not a forecast: it replays history exactly as it happened, including crashes like 1929-1932, 1973-1974, 2000-2002, 2008, and 2022.

What is an index fund?

An index fund is a fund that holds every company (or bond) in a market index, weighted by size, instead of paying a manager to pick winners. Buying one share of an S&P 500 index fund makes you a part-owner of roughly 500 of the largest US companies at once.

Index funds matter for two reasons:

• Diversification. A single company can go to zero; an index of hundreds rarely behaves like any single member. You earn the average outcome of the whole market.
• Low cost. Tracking an index is cheap, so fees are typically 0.03% to 0.25% per year, versus roughly 1% or more for actively managed funds. Over decades that fee gap compounds into a very large difference in final wealth.

Multi-asset funds (like Vanguard LifeStrategy or the iShares Core Allocation ETFs shown as presets) bundle stock and bond index funds into one product at a fixed split, rebalancing internally. The presets in this calculator mirror those real-world splits, but they are examples, not recommendations.

How the backtest works

1. Your blend assigns a percentage weight to each asset class: cash, bonds, stocks, and bitcoin. Weights always sum to 100%.
2. For each calendar year in your range, the portfolio earns the weighted average of that year's real historical returns. This is equivalent to rebalancing the portfolio back to its target weights once a year.
3. Monthly contributions are applied as 12 payments per year, credited mid-year, so each year's contributions earn about half a year of growth.
4. The chart and table show year-end values, total contributed, and the compound annual growth rate (CAGR) over the span actually backtested.

The CAGR is the single steady annual rate that would produce the same overall growth:

$$\mathrm{CAGR}={\left(\prod _{y=\text{start}}^{\text{end}}(1+r_y)\right)}^{1/n}-1$$

where each r_y is the blend's return in year y and n is the number of years.

Effective span and clamping

Each dataset covers a different period. If your blend includes an asset whose data starts later than your chosen start year, the backtest is clamped to the years where every weighted asset has data, and the calculator tells you which asset constrained the run. For example, a blend using MSCI World from 1928 will be clamped to 1998 onward, and any blend including bitcoin starts no earlier than 2011. Assets with 0% weight never constrain the span.

Data sources

• S&P 500, T-bills (cash), and T-bonds, 1928-2025: Aswath Damodaran, NYU Stern, "Historical Returns on Stocks, Bonds and Bills: 1928-2025". S&P 500 is total return including dividends; cash is the 3-month US Treasury bill; bonds are the 10-year US Treasury bond.
• MSCI World and MSCI Emerging Markets, 1998-2025: MSCI end-of-day index data (gross dividends reinvested, USD), cross-checked against official MSCI factsheets.
• FTSE All-Share, 1986-2025: FTSE Russell factsheets (GBP, total return with dividends reinvested), with earlier years cross-checked against archived issuer factsheets.
• Bitcoin, 2011-2025: annual returns derived from year-end (Dec 31, UTC) USD closes, cross-checked across Yahoo Finance, Bitstamp, Coin Metrics, and blockchain.com.

Currencies

Each index's returns are applied in its own currency: S&P 500, MSCI, and bitcoin returns are in US dollars, while FTSE All-Share returns are in pounds sterling. The calculator applies those own-currency percentage returns directly to your contributions and ignores exchange-rate movements. The US/UK toggle changes which preset funds are shown and whether results are formatted as $ or £; it does not convert between currencies. A UK investor holding the S&P 500 would in reality also experience GBP/USD swings that this tool does not model.

Fees and limitations

• Returns are nominal (not adjusted for inflation) and before fees and taxes. The preset cards show each fund's ongoing charge so you can judge the drag; an 0.20%/yr fee roughly subtracts 0.2 percentage points from each year's return.
• Annual rebalancing is assumed. Real funds rebalance more often and incur small trading costs.
• Annual data hides within-year volatility. An asset can be down 30% mid-year and still post a positive calendar-year return.
• Bitcoin's history is short (15 years) and extreme. A backtest that includes it is dominated by a period of explosive early growth that may never repeat; treat high-bitcoin blends as illustrations of volatility, not expected outcomes.
• Past performance does not guarantee future results. A $10,000 backtest ending well says nothing certain about the next 20 years.

How to use it

1. Choose your region (US or UK) to see relevant preset funds and currency formatting.
2. Set your lump sum and, optionally, a monthly contribution.
3. Pick a start and end year. Longer spans smooth out luck; short spans are dominated by it.
4. Pick a preset blend, or open "Customise blend" to set your own weights and choose which stock index drives the stocks slice.
5. Compare the Results and Chart tabs across different blends and periods. Try starting in 2000 or 2008 to see how a heavy stock allocation behaves through a crash.

Fund examples are illustrations, not recommendations.