Calculator guide
Project how a starting balance can grow when interest is added to the balance and future interest earns on it.
Formula or method
A = P(1+r/m)^(mt) + C[((1+r/m)^(mt)−1)/(r/m)], where P is principal, C periodic contribution, r annual rate, m compounds per year, and t years.
How to use this calculator
- Enter the starting principal and annual rate.
- Choose compounding frequency and years.
- Add a regular contribution if applicable, then compare ending value with contributions.
Worked example
$1,000 at 5% compounded monthly for 2 years, with no deposits, becomes 1000(1+.05/12)^24 = about $1,104.94.
Understanding the result
Growth depends on rate, time, compounding, and deposits. The result is a projection, not a promise of investment performance.
Limitations and assumptions
- Assumes a constant rate and contributions made at the selected interval.
- Ignores taxes, fees, inflation, withdrawals, and market volatility.
Frequently asked questions
What is compounding?
It is earning returns on both the original balance and previously credited returns.
Are deposits made at the beginning?
Check the calculator's convention; beginning- and end-of-period deposits differ.
Does this predict stocks?
No. Market returns vary and can be negative.
Sources
Educational projection only; not financial advice or a guarantee of returns.