How compound interest works
With compound interest, the interest you earn is added to the balance and starts earning interest too. In the first years the difference from simple interest is small, but over long periods the interest on interest becomes a larger and larger part of the total. That is why time usually matters as much as the rate.
The calculator lets you see that effect with your own numbers instead of a generic example. Change the number of years or the monthly deposit and watch how the final balance and the share that comes from interest move.
Monthly savings and goals
Most people don't save one lump sum: they put aside a fixed amount each month. Enter that amount as the monthly contribution, with or without an initial deposit, to see roughly where a savings plan could be in five, ten or twenty years, whether it is for an emergency fund, a down payment, a child's education or retirement.
It also works the other way. Try different monthly amounts until the final balance reaches your goal, so you know how much you would need to save each month at a given rate.
Monthly or yearly compounding
Interest can be added to the balance every month or once a year. With the same annual rate, monthly compounding gives a slightly higher result, because interest starts earning sooner. Choose the option that matches the account or the product you are comparing, as stated in its terms.
The year-by-year table shows the balance at the end of each year, so you can see the growth over time and compare the totals at any point.
What the simulation does not include
This is a fixed-rate simulation. It assumes the same rate every year and does not include taxes, fees, commissions or inflation. Real savings accounts, deposits and investments change their rates, may charge costs, and some can lose value, so the real result can be quite different.
It is a tool to understand the math and compare scenarios, not investment advice, and it does not recommend any product. For decisions about your money, read the terms of each product and, if needed, talk to a qualified advisor. Everything is calculated in your browser and nothing is sent or saved.