Compound interest is the engine of long-term saving. Enter a starting balance, monthly contribution, expected return and time horizon to project growth, and see the monthly deposit needed to reach a specific goal.
How it works
Project the growth of savings with regular monthly contributions, and calculate the monthly deposit required to reach a savings goal.
Effective monthly rate rₘ = (1 + r ÷ m)^(m ÷ 12) − 1
FV = P(1 + rₘ)ᴺ + C × [(1 + rₘ)ᴺ − 1] ÷ rₘ × (1 + rₘ·type)
Required deposit = (Goal − P(1 + rₘ)ᴺ) ÷ {[(1 + rₘ)ᴺ − 1] ÷ rₘ × (1 + rₘ·type)}Common uses
- Retirement and education savings plans
- Reserve and sinking-fund planning
- Financial literacy and planning discussions
Worked example
The calculator above opens with this example. Change any input to see the results update instantly, or select Reset to return to these figures.
| Starting balance | $25,000 |
| Monthly contribution | $750 |
| Annual return | 7% |
| Years | 20 |
| Compounding | Monthly |
| Contribution timing | End of month |
| Savings goal | $600,000 |
| Future value | $491,663 |
| Total contributions | $205,000 |
| Interest earned | $286,663 |
| Effective annual rate | 7.23% |
| Monthly deposit to reach goal | $957.97 |
| Years to goal at current plan | 22.31 years |
Interpreting the results
- Returns are nominal; subtract expected inflation to see the value in today’s dollars.
- Taxes and fees are not modeled — a 1% annual fee materially reduces long-horizon balances.
Frequently asked questions
How does compounding frequency affect growth?
More frequent compounding earns interest on interest sooner, producing a slightly higher effective annual rate. The difference between monthly and daily compounding is small; the return rate and time horizon matter far more.
What return rate should I assume?
Use a rate consistent with the investments you will hold and net of fees. Conservative plans often model a range of returns rather than a single rate, since actual returns vary year to year.
Does this account for inflation or taxes?
No. Results are nominal and pre-tax. To see purchasing power, subtract expected inflation from the return rate, and consider the tax treatment of the account you are using.
Related calculators
- Time Value of Money (PV / FV / PMT): Solve for future value, present value, payment, periods or rate.
- ROI Calculator: Return on investment, annualized return and net gain.
- CAGR & Growth Rate Calculator: Compound annual growth, total growth and year-over-year changes.
- Retirement Planner: Projected retirement savings, required nest egg, shortfall and extra savings needed.
- Inflation & Real Return Calculator: Real and after-tax real return, future value and lost purchasing power.