The cost of waiting.
Money left in cash isn't standing still — it's quietly falling behind what it could have earned. Here's what choosing cash over investing could cost you, by the day, week, month and year.
These four figures show how fast the gap is widening by your final year, not an average across the whole period. Early years cost far less; later years cost far more, because compounding builds on itself.
The invested figure is shown after charges. I take the return you set and subtract the charges, so this projection grows at 7.0% less 0.75%, or 6.25% a year. Cash rates are quoted gross, before any tax on the interest.
Invested vs. cash, over time
What "the cost of waiting" actually means
Waiting is a decision. It rarely feels like one. Money sits in an easy-access saver, the months go by, and nothing appears to happen. The cost of waiting is the difference between what that money might have earned invested and what it earns in cash. You never see it leave your account, which is why it is easy to ignore. It turns up years later as a smaller number than you expected.
I have written about the wider point in cash is not safe. The short version: cash protects the number in your account, not what that number buys. To see inflation on its own, use my cash erosion calculator.
Why the gap widens rather than staying flat
Most people expect the gap to grow in a straight line. It doesn't. The invested pot earns a return, and the next year that return earns a return of its own. Cash does the same, but from a lower rate, so the two lines part company slowly at first and then quickly. That is why the cards above show your final year, not an average.
In year one the difference might be a meal out. By year twenty-five it can be a meaningful slice of a year's income. To watch compounding on its own, use the compound growth calculator.
Cash still has a job
None of this is an argument against holding cash. I would never suggest a client invests their emergency fund. Three to six months of essential spending, held where you can reach it the same day, is the foundation everything else sits on.
The same goes for money you'll need within about five years. A house deposit, a wedding, school fees, a new car. Money with a short deadline should not be exposed to markets that can fall sharply and take years to recover. Cash is the right tool for those jobs. The question here is narrower: is more of your money in cash than those jobs require?
What this calculator does not model
Quite a lot, and it matters.
Volatility and the order returns arrive in
Real returns are lumpy. A portfolio averaging 7% a year might fall 20% in one year and rise 25% in another. When those years fall matters too. A poor run early on, while you are still paying money in, leaves you somewhere different from the same run late on. That is sequence risk, and this tool ignores it.
Tax
No tax is applied anywhere. An ISA, a pension and a general investment account are taxed very differently, and interest on cash can be taxable too. The wrapper often changes the answer more than the rate of return does.
Rates that never stand still
Your investment return, cash rate and inflation are all held constant here. None of them behave that way. Savings rates move with the Bank of England, and inflation has spent recent years reminding everyone it is not a fixed number.
A straight line is not how returns behave
The chart draws smooth curves because smooth curves are easy to read. Nothing behaves like that. A real portfolio zigzags, and the years that test people are the ones where the line drops and stays down. Treat it as the direction of travel, not a forecast of your money. Nobody can give you that.
If you'd like to talk any of this through, the first conversation is free. There are more tools on my resources page, or you can get in touch.
Common questions
Does this calculator include charges?
Yes. The charges slider is deducted from the investment return before anything is projected, so a 7% return with 0.75% charges grows at 6.25% a year. Cash is left alone, because the rate a bank quotes is already the rate you receive. That makes the headline gap smaller than it would otherwise look, which is the honest way round.
What investment return should I put in?
There is no correct answer, and I am not going to pretend otherwise. Try a few. Run it at 4% as well as 7%, and see how much the conclusion depends on the assumption. If a decision only works at the optimistic end, it is not a decision, it is a hope.
Should I move all my cash into investments?
No. Keep an emergency fund and anything you will need within about five years in cash. This calculator is about the money beyond that, sitting in an account earning less than it could over a long period. How much that is depends entirely on your circumstances.
Why is my final-year figure so much bigger than my first-year figure?
Because compounding builds on itself. The gap between invested and cash grows a little in the early years and a lot in the later ones. The four cards show the last twelve months of your time horizon, not an average, so they are deliberately the largest numbers on the page.
Is this financial advice?
No. It is a general illustration, not a personal recommendation, and it takes no account of your circumstances, your tax position or your plans. If you want advice tailored to you, that is a conversation, and the first one is free.
Wondering what this means for you?
A complimentary 30-minute conversation. We look at where your money is, what you want it to do, and whether working together makes sense. No obligation, and no pitch.
Arrange a conversationFor illustration only — this is not financial advice or a personal recommendation. Figures are estimates based on the assumptions you enter and assume constant rates of return with no allowance for product charges or tax; inflation is used only to show the cash figure in today's money. The value of investments can fall as well as rise and you may get back less than you invest. Past performance is not a guide to future returns. Cash returns and investment returns are not guaranteed. Before acting, please seek regulated, personalised advice.