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Compound Interest & Savings Calculator

Plan your financial future by calculating how your wealth grows over time with the power of compounding.

Estimated Future Balance

$0.00
Total Contributions $0.00
Total Interest Earned $0.00
function calculateSavings() { var initialDeposit = parseFloat(document.getElementById('initial_deposit').value); var monthlyContribution = parseFloat(document.getElementById('monthly_contribution').value); var annualRate = parseFloat(document.getElementById('interest_rate').value) / 100; var years = parseFloat(document.getElementById('investment_years').value); if (isNaN(initialDeposit) || isNaN(monthlyContribution) || isNaN(annualRate) || isNaN(years)) { alert('Please enter valid numerical values.'); return; } var monthlyRate = annualRate / 12; var months = years * 12; // Future Value of Initial Deposit: P(1 + r/n)^(nt) var fvInitial = initialDeposit * Math.pow((1 + monthlyRate), months); // Future Value of Monthly Contributions: PMT * [((1 + r/n)^(nt) – 1) / (r/n)] var fvSeries = monthlyContribution * ((Math.pow((1 + monthlyRate), months) – 1) / monthlyRate); var totalBalance = fvInitial + fvSeries; var totalInvested = initialDeposit + (monthlyContribution * months); var totalInterest = totalBalance – totalInvested; document.getElementById('total_balance').innerText = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' }).format(totalBalance); document.getElementById('total_contributions').innerText = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' }).format(totalInvested); document.getElementById('total_interest').innerText = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' }).format(totalInterest); document.getElementById('results_section').style.display = 'block'; }

Understanding Compound Interest

Compound interest is often referred to as the "eighth wonder of the world." Unlike simple interest, which is calculated only on the principal amount, compound interest is calculated on the initial principal and also on the accumulated interest of previous periods.

How This Calculator Works

Our Compound Interest Calculator uses the standard formula to help you visualize wealth accumulation. The math involves two main components:

  • Principal Growth: Your starting balance grows exponentially based on your interest rate and time.
  • Annuity Growth: Your recurring monthly contributions also grow and earn interest, creating a "snowball effect."

The Compound Interest Formula

A = P(1 + r/n)^(nt) + PMT × [((1 + r/n)^(nt) – 1) / (r/n)]

Where:
A = Final Balance
P = Principal (Initial Deposit)
r = Annual Interest Rate (decimal)
n = Compounding periods per year (12 for monthly)
t = Number of years
PMT = Monthly contribution amount

Real-World Example

Imagine you start with $10,000 and contribute $500 per month into an index fund with an average annual return of 8%. After 20 years:

  • Total Contributions: $130,000
  • Interest Earned: $211,819
  • Total Wealth: $341,819

In this scenario, your interest earned actually exceeds your total contributions, demonstrating why starting early is the most critical factor in retirement planning.

3 Tips to Maximize Compounding

  1. Start Early: Even small amounts saved in your 20s can outperform large amounts saved in your 40s due to the time-value of money.
  2. Increase Frequency: Monthly contributions capture market gains more consistently than annual contributions through dollar-cost averaging.
  3. Reinvest Dividends: Always ensure your investment account is set to automatically reinvest any dividends or interest earned back into the principal.

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