What this savings calculator shows
Enter an optional starting deposit, the amount you plan to add every month, how many years you will save, an interest rate and how often interest compounds. You get the future balance, how much of it is your own deposits, how much is interest and a year-by-year table.
The math follows the U.S. Securities and Exchange Commission's Compound Interest Calculator on Investor.gov. We checked ten cases against that calculator, including every compounding option, and the results match to the cent.
The formula
P is the initial deposit, A the monthly deposit, r the annual rate as a decimal, k the number of compounding periods a year (1, 2, 4, 12 or 365) and Y the number of years.
Future balance = P × (1 + r/k)^(kY) + D × ((1 + r/k)^(kY) − 1) ÷ (r/k)
D = 12 × A ÷ k, the deposits made during one compounding period
Each period, interest is figured on the balance at the start of the period and that period's deposits are added at its end. With monthly compounding, D is simply your monthly deposit. With annual compounding, a year of deposits goes in at the end of the year, so $100 a month for one year at 6% compounded annually is exactly $1,200.00, while monthly compounding gives $1,233.56.
If the rate is 0%, the balance is simply the initial deposit plus all monthly deposits.
How much does compounding frequency matter?
Here is $100 a month for 10 years at 5%. Total deposits are $12,000 in every row.
| Compounding | Future balance | Interest |
|---|---|---|
| Annually | $15,093.47 | $3,093.47 |
| Semiannually | $15,326.79 | $3,326.79 |
| Quarterly | $15,446.87 | $3,446.87 |
| Monthly | $15,528.23 | $3,528.23 |
| Daily | $15,567.96 | $3,567.96 |
The rate and the number of years matter far more than the compounding option. Starting with $1,000 and adding $200 a month for 5 years at 4% compounded monthly grows to $14,480.79, of which $13,000 is your deposits and $1,480.79 is interest. A single $10,000 deposit left for 10 years at 5% grows to $16,288.95 compounded annually or $16,470.09 compounded monthly.
Things to keep in mind
- The calculator assumes the same rate for the whole period. Savings account rates can change, so treat the result as an estimate and try a few rates.
- Results are before taxes and fees.
- Your bank may credit interest by the day or post deposits on different dates, so its figures can be a little different.
- This page is an educational estimate, not financial advice.
Source
- U.S. Securities and Exchange Commission, Investor.gov. Compound Interest Calculator. Inputs (initial investment, monthly contribution, years, estimated annual rate, compound frequency: annually, semiannually, quarterly, monthly or daily) and the result values used to check this calculator.
Frequently asked questions
How do I calculate savings with monthly deposits?
Future balance = P(1 + r/k)^(kY) + D × ((1 + r/k)^(kY) − 1) ÷ (r/k), where D = 12 × monthly deposit ÷ k. $100 a month for 10 years at 5% compounded monthly grows to $15,528.23.
How much difference does compounding frequency make?
Less than the rate or the time. For $100 a month over 10 years at 5%, the balance is $15,093.47 compounded annually, $15,528.23 monthly and $15,567.96 daily.
Why is one year at annual compounding exactly my deposits?
With annual compounding, interest is credited once a year on the balance at the start of the year. Deposits made during the first year have not earned interest yet, so $100 a month for one year at 6% gives $1,200.00.
Does this match the SEC calculator?
Yes. We checked ten cases against the Compound Interest Calculator on Investor.gov, covering every compounding option, and the results match to the cent.
Are taxes included?
No. Results are before taxes and fees.
Is this financial advice?
No. It is an educational estimate that assumes a fixed rate and on-time deposits.