Savings Calculator
Calculate how much your savings will grow over time with regular contributions and compound interest.
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How to use this calculator
FV = future value, P = initial deposit, r = periodic rate, n = periods, PMT = regular contribution.
- 1
Enter your initial lump-sum deposit.
- 2
Enter how much you will add each month.
- 3
Enter the expected annual interest rate.
- 4
Enter how many years you plan to save.
- 5
See the projected final balance and how much interest you will earn.
Frequently asked questions
What interest rate should I use?
High-yield savings accounts currently offer 4–5% APY. Money market accounts are similar. A diversified stock index fund has historically returned ~7–10% annually before inflation, but with risk. For a guaranteed savings goal, use a rate close to current HYSA rates.
How much should I save each month?
A common rule is to save at least 20% of take-home pay (the 50/30/20 rule). For a specific goal, work backward: enter your target as the final balance, adjust contributions until you reach it.
Does it matter when I make my monthly deposit?
Yes — depositing at the start of each month (annuity due) earns one extra period of interest compared to depositing at month end (ordinary annuity). The difference is small but meaningful over decades.
What is compound interest?
Compound interest means earning interest on your interest. At 5% annual rate, $1,000 grows to $1,050 after year 1. In year 2, you earn interest on $1,050, not $1,000 — this snowball effect is the cornerstone of long-term wealth building.
How savings grow over time
The power of regular contributions
Adding a fixed amount every month — called dollar-cost averaging or systematic saving — is more powerful than a one-time deposit. $200/month at 5% over 10 years grows to roughly $31,000 from $24,000 in deposits. The extra $7,000 is pure compound interest.
Choosing the right savings account
Traditional bank savings accounts often yield below 0.5%. High-yield savings accounts (HYSAs) at online banks offer 4–5% with the same FDIC protection. For longer horizons (5+ years), a low-cost index fund in a tax-advantaged account (401k, ISA, RRSP) can significantly outperform cash savings.
Tax-advantaged accounts amplify savings growth
Interest in a regular savings account is taxed yearly. In a Roth IRA (USA), ISA (UK), or TFSA (Canada), growth is tax-free. This can add tens of thousands of dollars to a long-term savings plan without increasing your contribution.
Learn more from an authoritative source:
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Results are estimates for informational purposes only and do not constitute professional financial, medical, legal, or technical advice. Read full disclaimer →