A savings account is a fundamental financial tool designed for accumulating money over time while earning a modest return. The interest earned on your savings is essentially a reward from the financial institution for depositing your funds with them. This calculator helps you project how your savings will grow based on your initial deposit, regular contributions, the interest rate offered, and how often that interest is compounded.
How the Calculation Works
The formula used in this calculator is based on the future value of an annuity combined with compound interest. It accounts for your initial lump sum and the series of regular deposits, all growing with compound interest.
The core formula for compound interest is:
FV = PV * (1 + r/n)^(nt)
Where:
FV = Future Value
PV = Present Value (Initial Deposit)
r = Annual Interest Rate (as a decimal)
n = Number of times interest is compounded per year
t = Number of years
For regular contributions, we use the future value of an ordinary annuity formula, adjusted for compound interest periods:
FV_annuity = P * [((1 + i)^k - 1) / i]
Where:
FV_annuity = Future Value of the annuity
P = Periodic Payment (Monthly Contribution)
i = Interest rate per period (r/n)
k = Total number of periods (n*t)
The calculator combines these to estimate the total future value:
(Note: The precise implementation may vary slightly based on exact calculation order and handling of periods, but this represents the core logic.)
The total interest earned is the difference between the total amount accumulated and the sum of all deposits made (initial + monthly contributions over time).
Why Use This Calculator?
Financial Planning: Estimate how long it will take to reach a specific savings goal.
Compare Accounts: Evaluate different savings accounts by inputting their respective interest rates and compounding frequencies.
Visualize Growth: Understand the power of compound interest and consistent saving habits.
Budgeting: Determine how much you can realistically set aside monthly to meet your targets.
By inputting your specific details, you can gain a clear picture of your potential savings growth and make more informed decisions about your financial future.
function calculateInterest() {
var initialDeposit = parseFloat(document.getElementById("initialDeposit").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value) / 100; // Convert percentage to decimal
var monthlyContributions = parseFloat(document.getElementById("monthlyContributions").value);
var years = parseInt(document.getElementById("years").value);
var compoundingFrequency = parseInt(document.getElementById("compoundingFrequency").value);
var resultDiv = document.getElementById("result");
var totalSavingsDisplay = document.getElementById("totalSavings");
var totalInterestEarnedDisplay = document.getElementById("totalInterestEarned");
// Validate inputs
if (isNaN(initialDeposit) || initialDeposit < 0 ||
isNaN(annualInterestRate) || annualInterestRate < 0 ||
isNaN(monthlyContributions) || monthlyContributions < 0 ||
isNaN(years) || years < 1 ||
isNaN(compoundingFrequency) || compoundingFrequency 0) {
futureValueContributions = monthlyContributions * ((Math.pow((1 + ratePerPeriod), numberOfPeriods) – 1) / ratePerPeriod);
}
var totalSavings = futureValueInitialDeposit + futureValueContributions;
var totalInterestEarned = totalSavings – totalDeposits;
// Format currency and display
totalSavingsDisplay.textContent = "$" + totalSavings.toFixed(2);
totalInterestEarnedDisplay.textContent = "Interest Earned: $" + totalInterestEarned.toFixed(2);
totalSavingsDisplay.style.color = "#28a745"; // Green for success
}