The question
When you start investing, your contributions do almost all of the work.
Suppose you begin with £10,000 and invest £500 each month. Over a year you add £6,000 yourself. If the portfolio returned 7% over that year, £10,000 would generate roughly £700 of growth, before allowing for the timing of the monthly contributions.
At that stage, whether you save £400, £500 or £600 each month matters much more than a small difference in investment return.
That changes as the portfolio becomes larger. Eventually, the amount the portfolio might gain or lose in a year becomes greater than the amount you contribute. That crossover is worth knowing, but it leads to a more useful question: at what point do you no longer need to keep maximising your contributions, and what could that money do instead?
When does expected growth equal your contributions?
A simple approximation is:
- is the portfolio value at which the two are equal;
- is the amount you contribute each year;
- is the assumed annual return, as a decimal (7% is 0.07).
If you contribute £500 a month:
Assuming a 7% annual return:
So at around £86,000, a 7% return is approximately £6,000: the same as a full year of £500 monthly contributions.
This is only an approximation. Markets do not return 7% every year, and contributions made during the year also have time to grow. £85,700 is not a special threshold; it just gives an idea of where the crossover sits under these assumptions.
- Contributions
- Expected growth at 7%
Contributions are £500 a month, or £6,000 a year. Expected growth is 7% of the portfolio’s value, ignoring when in the year contributions are made: an average, not a forecast for any particular year.
| Portfolio value | Contributions | Expected growth at 7% |
|---|---|---|
| £0 | £6,000 | £0 |
| £25,000 | £6,000 | £1,750 |
| £50,000 | £6,000 | £3,500 |
| £85,700 | £6,000 | £6,000 |
| £100,000 | £6,000 | £7,000 |
| £150,000 | £6,000 | £10,500 |
| £200,000 | £6,000 | £14,000 |
Below £85,700, a year of saving adds more than a year of expected growth. Above it, expected growth is larger, and the gap widens as the portfolio grows.
Does the crossover mean you can stop contributing?
Once you are past the crossover, a natural reaction is:
If my portfolio is already growing by more than I contribute each year, why keep putting £500 a month into it instead of using that money now?
It is a fair question. But reaching the crossover does not automatically mean you can stop contributing. An £86,000 portfolio might generate £6,000 in an average 7% year, but whether that is enough depends on what you are building the portfolio for.
The more useful milestone comes later: the point where the portfolio you already have is enough to reach your goal without needing all of your future contributions. That depends on your age, your target, your spending, your existing portfolio and the returns you assume.
The crossover
Expected annual growth becomes similar to what you add each year, at . It is an interesting mathematical milestone, and it explains why market movements begin to dominate the chart of your portfolio.
Contributions becoming optional
The portfolio you already have could reach your target without all of your future contributions. This is the milestone that can actually change a decision.
The first can come long before the second, so the crossover on its own is not a reason to stop contributing.
When the portfolio moves more than you add
The question gets harder to ignore as the portfolio grows. At £300,000, a 5% change in its value is:
A 5% movement is equivalent to two and a half years of £500 monthly contributions. If the portfolio moves by that much while you add £6,000, it is reasonable to ask whether all £6,000 still needs to go towards this particular goal.
The answer depends on your target and your circumstances, not on the size of the movement. Making the final portfolio as large as possible is not automatically the objective; reaching the future you are planning for is.
What the comparison hides is that stopping has a long-term cost. The £500 you invest today becomes part of the portfolio and can itself compound for years. At a hypothetical constant 7% annual return:
- is the future value;
- is the amount invested today;
- is the annual return;
- is the number of years.
A £500 contribution left invested for 20 years would become approximately:
A £500 contribution can therefore be worth much more than £500 by the time you eventually use it. The exact amount will depend on the returns along the way.
For the examples in this article, contributions are made at the end of each month and a 7% annual return is converted to the equivalent monthly rate.
What happens if you stop contributing?
That cost can be measured. Start with £100,000 invested today, assume the same 7% annual return for the next 25 years, and compare three choices:
- Keep contributing: £500 a month for all 25 years.
- Stop after 10 years: £500 a month for the first 10 years, then nothing.
- Stop now: no further contributions.
The starting point is identical. The gaps between the lines are the effect of continuing to contribute, including the growth those later contributions earn.
- Keep contributing
- Stop after 10 years
- Stop now
All three start from £100,000. Contributions are £500 a month, made at the end of each month, and every scenario assumes a constant 7% a year. Real returns vary; these lines are smooth only because the assumption is.
| Year | Keep contributing | Stop after 10 years | Stop now |
|---|---|---|---|
| 0 | £100,000 | £100,000 | £100,000 |
| 5 | £175,900 | £175,900 | £140,300 |
| 10 | £282,200 | £282,200 | £196,700 |
| 15 | £431,500 | £395,900 | £275,900 |
| 20 | £640,700 | £555,200 | £387,000 |
| 25 | £934,300 | £778,700 | £542,700 |
Keeping going for all 25 years ends £391,500 higher than stopping now. Stopping after 10 years, 40% of the months, still produces 60% of that difference: the earliest contributions have the longest to compound.
The chart shows what stopping costs. It does not show whether that cost matters: that depends on whether the lower line still reaches the target you are planning for.
When could stopping contributions still leave you on track?
This is the second milestone from earlier, and the calculation behind Coast FIRE.
Suppose you want a portfolio worth £600,000 in today’s money in 20 years. Instead of asking how much you need to contribute, ask a different question:
How much would I need invested today for the portfolio to reach £600,000 without another contribution?
The answer is the target’s present value:
- is the amount needed today;
- is the future target;
- is the assumed real annual return, after inflation, because the target is in today’s money;
- is the number of years remaining.
With a £600,000 target, 20 years and a 5% real return:
Under those assumptions, approximately £226,000 today could grow to £600,000 in 20 years without further contributions.
That does not mean £226,000 guarantees the target. The calculation assumes a return that will not occur neatly every year, and a lower return changes the answer considerably:
| Real return a year | Needed today | Share of the target |
|---|---|---|
| 3% | £332,000 | 55% |
| 4% | £274,000 | 46% |
| 5%Example | £226,000 | 38% |
| 6% | £187,000 | 31% |
Present value at a constant real return each year. No contributions, fees or taxes.
Between a 3% and a 6% assumption the answer changes by £145,000. The result is an output of the assumption, not a fixed rule.
What changes when you no longer need to maximise contributions?
Reaching this point can change what you do with new income. If your existing portfolio is already on track for the future you want, every additional pound does not necessarily have to be invested.
You might choose to:
- spend more today;
- reduce your working hours;
- accept a lower-paid job that you prefer;
- take a career break;
- direct money towards a home, travel or another goal;
- keep contributing and bring the target date forward;
- keep contributing to build more margin into the plan.
None of these is automatically the right choice. The point is that continuing to maximise the portfolio becomes a choice rather than a requirement of the original plan.
Building a portfolio can therefore give you more choices before retirement, not only when you eventually reach it.
So when does your portfolio do the heavy lifting?
Under these assumptions, expected growth overtakes £500 monthly contributions at around £86,000. But that crossover does not tell you when to stop contributing.
The more useful question is whether you still need those contributions to reach the future you are planning for. If the answer eventually becomes no, that money can start doing something else — including improving your life before retirement.