Interest Calculator

How to use this calculator

1. Enter or choose initial deposit.
2. Enter or choose monthly contribution.
3. Enter or choose yearly contribution.
4. Enter or choose contributions made at the.
5. Enter or choose interest rate (per year).
6. The end balance updates as you type. Use Copy result or Share to keep it.

Method

Monthly rate i = (1 + r/m)^(m/12) − 1; each month: Balance = Balance × (1 + i) + deposits; each year: Balance −= Tax% × interest earned that year; Real value = Balance ÷ (1 + inflation)^years

r

nominal annual interest rate

m

compounding periods per year

i

equivalent monthly rate

Worked example

1. Compounded yearly at 5%, the deposit is multiplied by 1.05 each year.
2. 10,000 × 1.05^10 = 10,000 × 1.628895 = $16,288.95.
3. Interest earned = 16,288.95 − 10,000 = $6,288.95.

$10,000 at 5% compounded yearly grows to $16,288.95 in 10 years, earning $6,288.95 of interest.

What the result means

If the after-inflation value is close to what you put in, your savings are only keeping pace with prices. Tax on interest compounds too: 20% tax on a 5% rate leaves you a 4% net rate every year.

Assumptions and limits

• The interest rate stays the same for the whole period.
• Deposits earn interest from the month they are made at the equivalent monthly rate.
• Tax is deducted from the balance once a year on that year’s interest, at the rate you enter.
• Tax allowances (such as tax-free interest thresholds) are not modelled; set the tax rate to 0 if your interest is tax-free.
• Inflation is applied as a constant yearly rate.