CD Calculator with Monthly Deposits
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Certificate of Deposit (CD) Calculator with Monthly Deposits
Your CD's Estimated Maturity Value
$0.00
Understanding Your Certificate of Deposit (CD) with Monthly Deposits
A Certificate of Deposit (CD) is a financial product offered by banks and credit unions that allows you to earn a fixed interest rate over a specified period. CDs are generally considered low-risk investments because they are insured by the FDIC (up to $250,000 per depositor, per insured bank, for each account ownership category) or NCUA. This calculator helps you estimate the future value of your CD, taking into account an initial deposit, regular monthly contributions, a fixed annual interest rate, the CD's term, and its compounding frequency.
How the Calculation Works
The calculation for a CD with ongoing monthly deposits involves two main components:
- The growth of the initial deposit.
- The growth of the series of monthly deposits.
The formula used is a combination of the compound interest formula and the future value of an ordinary annuity formula.
1. Future Value of the Initial Deposit:
This part uses the standard compound interest formula:
FV = P * (1 + r/n)^(nt)
Where:
FV = Future Value of the initial depositP = Principal amount (Initial Deposit)r = Annual interest rate (as a decimal)n = Number of times interest is compounded per year (Compounding Frequency)t = Number of years the money is invested for (CD Term)
2. Future Value of Monthly Deposits (Annuity):
This uses the future value of an ordinary annuity formula for the series of monthly deposits:
FV_annuity = M * [((1 + i)^N - 1) / i]
Where:
FV_annuity = Future Value of the series of monthly depositsM = Monthly Deposit amounti = Periodic interest rate (annual rate / compounding frequency) = (r/n)N = Total number of periods (CD Term in years * compounding frequency) = (t * n)
Total Maturity Value:
The total maturity value is the sum of the future value of the initial deposit and the future value of the monthly deposits.
Total FV = FV (Initial Deposit) + FV_annuity
The calculator applies these principles, ensuring that the compounding frequency is correctly factored into both the initial deposit's growth and the monthly deposits' accumulation.
When to Use This Calculator
- Saving for a Specific Goal: If you have a target amount you need by a certain date (e.g., for a down payment, a vacation, or educational expenses) and want to see if regular contributions to a CD can help you reach it.
- Maximizing CD Returns: To compare different CD terms, interest rates, or deposit strategies to find the most effective way to grow your savings.
- Understanding Investment Growth: To visualize how your money can grow over time with consistent saving and compounding interest.
- Financial Planning: As part of your broader financial planning to allocate funds between different savings and investment vehicles.
Disclaimer: This calculator provides an estimate based on the inputs provided. It does not account for taxes, early withdrawal penalties, or changes in interest rates if the CD is not fixed. Always consult with a financial advisor for personalized advice.
function calculateCDMaturity() {
var initialDeposit = parseFloat(document.getElementById("initialDeposit").value);
var monthlyDeposit = parseFloat(document.getElementById("monthlyDeposit").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var cdTermYears = parseFloat(document.getElementById("cdTermYears").value);
var compoundingFrequency = parseInt(document.getElementById("compoundingFrequency").value);
var resultElement = document.getElementById("result-value");
var resultDisplay = "$0.00"; // Default value
// Input validation
if (isNaN(initialDeposit) || isNaN(monthlyDeposit) || isNaN(annualInterestRate) || isNaN(cdTermYears) || isNaN(compoundingFrequency)) {
alert("Please enter valid numbers for all fields.");
resultDisplay = "Invalid Input";
} else if (annualInterestRate < 0 || cdTermYears <= 0 || initialDeposit < 0 || monthlyDeposit 0) { // Avoid division by zero if rate is 0
fvMonthlyDeposits = monthlyDeposit * ( (Math.pow((1 + ratePerPeriod), numberOfPeriods) – 1) / ratePerPeriod );
} else { // If rate is 0, future value is just the sum of deposits
fvMonthlyDeposits = monthlyDeposit * numberOfPeriods;
}
var totalMaturityValue = fvInitialDeposit + fvMonthlyDeposits;
// Format to currency
resultDisplay = "$" + totalMaturityValue.toFixed(2);
}
resultElement.textContent = resultDisplay;
}