Compound Interest & Savings Growth Calculator
Set a starting amount, what you add and how often, and the tool projects the balance month by month. The fourth figure is the one most calculators skip: what that balance is actually worth once inflation has had its turn.
Paying at the start gives each contribution one extra period of growth.
For paying in a little more as your income rises. Leave at 0 for a flat amount.
The nominal rate the account advertises, before compounding is applied.
An assumption you choose, not a forecast. Set it to 0 to switch the real-value column off.
Balance year by year
What compounding frequency actually changes
Compounding means interest starts earning interest. How often that happens is the difference between the rate an account advertises and the rate you get.
The conversion is (1 + r/n)n − 1, where r is the nominal annual rate and n is how many times a year it compounds. A nominal 6% compounded monthly works out to an effective 6.17%. Compounded daily it is 6.18%. Compounded once a year it is exactly 6%.
Notice how quickly that flattens out. Going from yearly to monthly is worth 0.17 percentage points; going from monthly to daily is worth about 0.02. Banks advertising daily compounding are selling you a rounding error. In most countries the honest number has a name — APY in the US, AER in the UK — and it is the effective rate, which is the one to compare between accounts.
The formula, and why this tool does not use it
The textbook future-value formula, FV = P(1 + r/n)nt, only describes a lump sum left alone. The moment you add money regularly you need the annuity formula instead, and the moment those contributions change size, or arrive on a different schedule from the compounding, the closed-form expression stops existing.
So the tool simulates instead. It converts whatever compounding you pick into one equivalent monthly growth factor — the twelfth root of the effective annual rate — and walks forward month by month, adding contributions when they fall due. For a lump sum this gives exactly the textbook answer. For contributions it treats growth as accruing smoothly through the year rather than being credited in one lump on the compounding date, which is how most real savings accounts and every investment fund behave. Against a calculator that credits interest only on compounding dates you may see a difference of a fraction of a percent on the final figure.
Timing matters more than people expect. Contributing at the start of each period rather than the end gives every contribution one extra period of growth, which over decades is worth roughly one extra period's interest on the whole pot.
Why the inflation column is there
A projection that says you will have a large number in thirty years is telling you almost nothing unless you know what that number buys. The real-value figure divides the balance by (1 + i)t to express it in today's purchasing power.
The effect is brutal at long horizons. At 2% inflation, money loses about a third of its value over twenty years. At 3% it loses nearly half. If the return you are modelling is close to the inflation you are assuming, the honest conclusion is that the balance grows and your buying power does not.
Where this will be wrong
- Markets do not return a constant rate. A fixed 7% a year is a useful average and a terrible description of reality. The order of returns matters: a bad decade at the start of a savings plan hurts far less than a bad decade at the end, and no single-rate model shows you that.
- No tax. Interest, dividends and gains are taxed differently in every country and often differently inside and outside a tax-sheltered account. Enter a rate net of tax if that matters to you.
- No fees. Fees compound exactly the way returns do. A 1% annual fee on a 7% return does not cost you 1% — over thirty years it removes roughly a quarter of the final balance.
- Contributions are assumed to happen. The single biggest error in any projection like this is the one on the contribution line, not the return line.
Everything runs in this tab. No figure you type here is sent anywhere or stored.
Frequently asked questions
What is the difference between the interest rate and APY?
The rate is nominal — the headline number before compounding. APY (or AER in the UK) is the effective rate after compounding, and it is the one that tells you what a year actually earns. A nominal 6% compounded monthly is a 6.17% APY. Compare accounts on APY.
Does compounding daily beat compounding monthly?
Barely. At a nominal 6%, monthly gives an effective 6.17% and daily gives 6.18%. The gap between yearly and monthly is worth paying attention to; the gap between monthly and daily is marketing.
Should I contribute at the start or the end of the month?
The start, if the money is sitting idle anyway. Each contribution then earns one extra period of growth. Over decades the difference is real but modest — roughly one extra period of interest on the whole balance, not a transformation.
What return rate should I assume?
That is your assumption to make, and the tool deliberately does not suggest one. Whatever you pick, run the projection a second time with a rate two or three points lower. If the plan only works at the optimistic rate, it is not a plan.
Why does the result differ from my bank’s calculator?
Usually timing. This model spreads growth evenly across the months between compounding dates, while a bank may credit interest only on the compounding date itself, and may treat a contribution made mid-period as earning nothing until the next one. The difference is a fraction of a percent, not a different answer.
Last updated September 19, 2026