How to Use This Savings Calculator
Choose between "Future Value" to see how much your savings will grow, or "Time to Goal" to calculate how long it takes to reach a target. Enter your initial deposit, monthly contribution, and expected APY. The calculator instantly shows your projected balance, total deposited, and interest earned.
How Compound Interest Works
Compound interest earns returns on both your principal and previously earned interest. At 5% APY, $10,000 grows to $16,289 in 10 years. The more frequently interest compounds and the longer the time horizon, the more powerful the effect.
According to Investopedia, compound interest is interest calculated on both the initial principal and the accumulated interest from previous periods.
FV = P(1+r)^n + PMT x [(1+r)^n - 1] / r
Frequently Asked Questions
APY (Annual Percentage Yield) includes compounding — the actual return per year. APR does not account for compounding. For savings accounts, always compare APY. A 4.8% APR compounded monthly equals 4.91% APY.
The 50/30/20 rule suggests 20% of take-home pay toward savings and debt. For retirement, aim for 15% of gross income. Even $200/month compounded over 30 years grows significantly. Starting early matters more than the amount.
High-yield savings accounts offered 4-5% APY in early 2024. Traditional banks often offer 0.01-0.10%. Online banks typically offer the best rates. Compare APY (not just APR) to find the best option.
With $500/month at 4% APY: approximately 19 months. With $200/month at 4% APY: approximately 48 months. Use the calculator above with "Time to Goal" mode to estimate your specific timeline.