ToolPikaHow it works
The calculator follows your balance month by month. Each month it adds the interest earned (using the monthly equivalent of the rate for the compounding you chose) and then your contribution, which is assumed to be paid at the end of the month. Without contributions this gives exactly the textbook formula P × (1 + r/n)^(n·t).
The result shows the final balance, how much of it you contributed and how much is interest. The table breaks it down year by year.
Examples
| Scenario | Final balance | Of which interest |
|---|---|---|
| 10,000 at 5% for 10 years, monthly compounding | 16,470.09 | 6,470.09 |
| The same plus 100 a month | 31,998.32 | 9,998.32 |
| 5,000 at 7% for 30 years, yearly compounding | 38,061.28 | 33,061.28 |
| 200 a month at 7% for 30 years, monthly compounding | 243,994.20 | 171,994.20 |
In the last example, 72,000 of contributions grow to almost 244,000: more than two thirds of the final balance is interest, and most of it is earned in the last decade.
Keep in mind
- Real returns vary. Investments do not grow at a steady rate; use a conservative rate for planning.
- Inflation reduces what the final amount can buy. Subtracting expected inflation from the rate gives the growth in today’s money.
- Taxes and fees are not included and can make a large difference over long periods.