Savings calculator

How the savings calculator works

Enter what you start with, what you add each month, the interest rate and how long you will keep saving. The calculator walks through the period month by month: the deposit lands at the start of the month, interest on the whole balance is the annual rate divided by twelve, and it is credited either straight away or at the end of the year. Credited interest earns interest of its own from then on, which is what compounding means.

The second mode works backwards. Type the amount you want to end up with and the calculator tells you the monthly deposit that gets you there, useful for an emergency fund, a car or a house deposit where the target is known and the path is not.

• Tax on interest. Many banks withhold tax from every interest payment, so only the net amount reaches the account. The calculator deducts 15 % by default; switch it off for tax-free accounts or if your country handles it differently.
• Monthly or yearly crediting. Savings accounts usually credit interest monthly, fixed-term deposits yearly. At the same rate the difference is small, but over twenty years it adds up.
• Inflation. Money saved over ten years buys less than it does today. Enter an annual inflation rate and you also get the real value in today's prices.

Frequently asked questions

What is compound interest?

Interest earned not only on your deposits but on the interest already credited. The first few years look unremarkable, then the curve in the chart starts to bend upwards.

Which rate should I enter?

The annual rate the bank advertises for the account. Watch out for rates that depend on activity or apply only to part of the balance; the calculator wants the rate you will actually receive on the whole amount.

Why does the result differ from my bank's calculator?

Usually because of the deposit date and tax. This calculator places the deposit at the start of the month and deducts tax when interest is credited; banks sometimes assume an end-of-month deposit or show gross interest. The gap is a few percent of the interest, not of the total.

Does it work for investment funds too?

The formula does, the certainty does not. For funds or ETFs enter the average return you expect, but remember that real returns fluctuate and tax works differently. Treat the result as a guide, not as investment advice.