Calculate how your savings grow with monthly compounding interest.
Projected Savings:
$0.00
Understanding Your Savings Interest
The Monthly Savings Interest Calculator helps you visualize the power of compound interest on your savings, considering regular contributions. It's a valuable tool for financial planning, understanding how small, consistent efforts can lead to significant wealth accumulation over time.
How It Works: The Math Behind the Calculator
This calculator uses the compound interest formula, adapted for monthly contributions and compounding. The core idea is that your interest earnings also start earning interest, accelerating your savings growth.
The calculation for each month involves:
Starting balance from the previous month.
Adding the current month's contribution.
Calculating the interest earned on this new total for the month.
Adding the interest to the balance for the next month.
The formula for the future value of an ordinary annuity (which accounts for regular contributions) compounded monthly is:
n = Number of times that interest is compounded per year (12 for monthly)
t = Number of years the money is invested or borrowed for
In simpler terms, the calculator iteratively applies the interest and adds contributions month by month.
Example Calculation:
Let's say you have:
Initial Deposit (P): $1,000
Monthly Contribution (PMT): $100
Annual Interest Rate (r): 5% (or 0.05)
Number of Years (t): 10
Compounding Frequency (n): 12 (monthly)
The calculator will first determine the monthly interest rate: 0.05 / 12 = 0.00416667.
Then, it simulates the growth month by month. After 10 years (120 months), the final amount would reflect the initial deposit growing with interest, plus all monthly contributions, each also earning interest.
Key Factors Influencing Savings Growth:
Time: The longer your money is invested, the more significant the impact of compounding.
Interest Rate: Higher interest rates lead to faster growth.
Contribution Consistency: Regular contributions significantly boost your final savings amount.
Compounding Frequency: While this calculator focuses on monthly compounding, more frequent compounding (like daily) can yield slightly higher returns.
Use this calculator to experiment with different scenarios and understand how to effectively grow your savings over time.
function calculateInterest() {
var initialDeposit = parseFloat(document.getElementById("initialDeposit").value);
var monthlyContribution = parseFloat(document.getElementById("monthlyContribution").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var numberOfYears = parseInt(document.getElementById("numberOfYears").value);
var resultValueElement = document.getElementById("result-value");
var totalInterestEarnedElement = document.getElementById("totalInterestEarned");
if (isNaN(initialDeposit) || isNaN(monthlyContribution) || isNaN(annualInterestRate) || isNaN(numberOfYears) ||
initialDeposit < 0 || monthlyContribution < 0 || annualInterestRate < 0 || numberOfYears <= 0) {
resultValueElement.innerText = "Invalid Input";
totalInterestEarnedElement.innerText = "";
return;
}
var monthlyInterestRate = annualInterestRate / 100 / 12;
var numberOfMonths = numberOfYears * 12;
var totalInterestEarned = 0;
var currentBalance = initialDeposit;
for (var i = 0; i < numberOfMonths; i++) {
var interestThisMonth = currentBalance * monthlyInterestRate;
totalInterestEarned += interestThisMonth;
currentBalance += interestThisMonth + monthlyContribution;
}
var finalAmount = initialDeposit + (monthlyContribution * numberOfMonths) + totalInterestEarned;
var totalPrincipalContributed = initialDeposit + (monthlyContribution * numberOfMonths);
resultValueElement.innerText = "$" + finalAmount.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 });
totalInterestEarnedElement.innerText = `Total interest earned: $${totalInterestEarned.toLocaleString(undefined, { minimumFractionDigits: 2, maximumFractionDigits: 2 })} over ${numberOfYears} years.`;
}