1. Forgetting inflation
A final capital of €100,000 in 25 years doesn't have the same purchasing power as €100,000 today. If you want to reason in real terms, subtract expected inflation from the interest rate before calculating, instead of comparing the final figure directly with today's prices.
2. Ignoring fees
A 1-2% annual fee difference between products seems insignificant, but it applies every year on a growing capital: over 20-30 years it can represent a very significant part of the final result. Always compare total cost, not just the nominal interest rate.
3. Confusing compounding frequency
An interest rate compounded monthly is not the same as one compounded annually, even if the stated nominal rate is the same. The higher the compounding frequency, the slightly higher the final result for the same nominal rate.
4. Assuming a constant rate every year
Calculators (including this one) usually assume a fixed rate to simplify things. In products like investment funds, actual returns vary year to year, with good years and bad years. Any calculator's result is an estimate, not a promise.
5. Not accounting for interrupted contributions
Many projections assume constant contributions for the entire term. In real life there are periods when you can't contribute. It's worth also simulating a more conservative scenario for monthly contributions.
6. Comparing simple interest logic to compound interest incorrectly
It's a common mistake to mentally apply simple interest logic ("if I earn X per year, in 10 years I earn 10 times X") to a compound interest product, where growth isn't linear but accelerating.
7. Not accounting for taxes
In many countries, investment gains are taxed when withdrawn. A calculator's "final" capital is usually gross, before taxes; the actual net amount available will be somewhat lower.
8. Thinking starting late can always be made up by contributing more
It can be partly offset, but not entirely: the lost compounding time on the first contributions can't be recovered by increasing the monthly contribution later, because those later contributions have fewer years ahead to grow.
9. Confusing expected return with guaranteed return
The "conservative, moderate, aggressive" scenarios are only reference points for comparison, not guarantees of results. Higher expected return generally means higher associated risk and volatility.
10. Not reviewing the plan over time
A calculation made today with certain assumptions about rate, contribution, and term should be revisited periodically, as your income, goals, or market conditions change.