Quickly Calculate Monthly Compound Interest
On Lump Sum and/or Regular Deposits Into a High Yield Savings Account
How To Use This Monthly Compound Savings Calculator
The Basics
Use this calculator to quickly figure out how much money you will have saved up during a set investment period. First, enter your initial amount you have set aside, then enter the interest rate along with how long you intend to invest for.
Next enter how much money you intend to deposit or withdrawal each month. If this calculation is for a lump sum deposit with no recurring transactions enter "Never" in the "transaction frequency" drop down.
Once you have entered this information the calculator will inform you of how much money you will have saved up before income taxes, how much income tax you'll owe & what the remaining amount of money is worth in real terms after accounting for inflation.
If you would like to print out a schedule of your savings growth over time, please click on the "Create Growth Table" button to generate a printable schedule of your payment history, accumulated interest & balance.
Calculation Mechanics
How Interest is Compounded
Our calculator compounds interest each time money is added. If the account has a lump-sum initial deposit & does not have any monthly deposit, by default interest is compounded monthly. Most bank savings accounts use a daily average balance to compound interest daily and then add the amount to the account's balance monthly, which is mathematically quite similar to monthly compounding.
As there are 12 months in a year, the APR is divided by 12 and compounded each month, which is what increases the APY above the stated APR rate.
When printing out a savings growth table if the savings period begins on a date after the 28th of the month then when February comes around the date will be brought forward to the 28th (or the 29th on leap years), & will revert to the 30th or 31st as appropriate on subsequent months.
If you would like to change the compounding frequency for a one-time deposit then set the "amount added" variable to $0 and select "transaction frequency" at whatever frequency you wish to compound interest.
When Contributions Are Made
In the above calculator when recurring account contributions are made, money is added or subtracted at the beginning of each month, week, or other selected period. If you would like to end money at the end of each month then you would subtract the regular contribution amount from the initial savings to calculate interest at the end of the month.
For example, if you had $1,000 of savings for the initial deposit and wanted to deposit $100 a month at the end of each month you would set the initial deposit to $900. The first $100 deposit would be added to the $900 upfront to base the initial interest calculation off $1,000.
How Income Taxes Are Accounted For
This calculator estimates taxes based on the rate entered with the tax payment made at the end of the investment period. This approach is how tax payments would work on savings stored inside a tax deferred retirement account or how interest would be earned on a zero coupon bond.
Ordinary interest on a regular bank savings account is typically paid for on an annual basis, with banks sending account holders a 1099-INT if they earn above some baseline level of around $10. If your account is untaxed then enter zero as the marginal tax rate in the above calculator.
How Inflation is Accounted For
After taxes are deducted from interest earnings & final savings are calculated, inflation is accounted for by multiplying the final amount by (100% - inflation rate)years
I very frequently get the question:
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