How is the final balance calculated in this savings calculator?

The final balance is calculated using the compound interest formula: A = P(1 + r/n)^(nt) + PMT × (((1 + r/n)^(nt) - 1) / (r/n)) × (1 + (r/n)×b), where P is principal, r is annual rate, n is compounding periods per year, t is time in years, PMT is monthly payment, and b is 1 if payments are at period beginning or 0 if at end.

What does inflation-adjusted balance mean?

The inflation-adjusted balance shows the purchasing power of your savings in today's dollars. It's calculated by discounting the future balance by your expected inflation rate over the investment period.

How does compounding frequency affect my savings?

More frequent compounding (daily vs. monthly vs. annually) results in slightly higher returns because interest is calculated and added to your balance more often, allowing subsequent interest calculations to be based on a slightly larger balance.

Should I contribute at the beginning or end of the period?

Contributing at the beginning of the period typically yields slightly higher returns because your money has more time to compound. The difference becomes more significant over longer time horizons.

Savings Calculator 2025 | Calculate Compound Interest & Future Value

Initial Investment

Monthly Contribution

Investment Period (Years)

Annual Interest Rate (%)

Compounding Frequency

Contribution Timing

Inflation Rate (%)

Currency

Future Value

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Total Contributions

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Interest Earned

—

Inflation-Adjusted

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Amortization Schedule

Breakdown

Year	Contributions	Interest	Balance
Enter values and click Calculate

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Understanding Compound Interest and Savings Growth

Compound interest is one of the most powerful concepts in finance. It allows your savings to grow exponentially over time as you earn interest on both your initial investment and the accumulated interest from previous periods.

How Compound Interest Works

The formula for compound interest with regular contributions is:

A = P(1 + r/n)^(nt) + PMT × (((1 + r/n)^(nt) - 1) / (r/n)) × (1 + (r/n)×b)

Where:
A = Future value of investment
P = Principal investment amount
PMT = Regular contribution amount
r = Annual interest rate (decimal)
n = Number of compounding periods per year
t = Time in years
b = 1 if contributions are at beginning of period, 0 if at end

The Power of Starting Early

Even small amounts saved regularly can grow substantially over time thanks to compound interest. For example, saving $100 per month at a 7% annual return would grow to over $50,000 in 20 years.

Impact of Compounding Frequency

The more frequently interest is compounded, the faster your savings will grow. Daily compounding will yield slightly more than monthly compounding, which yields more than annual compounding.

Considering Inflation

While nominal returns show the actual dollar amount, inflation-adjusted returns show the purchasing power of your savings. A 2-3% inflation rate can significantly reduce the real value of your savings over long periods.