How to use this calculator
Project savings from an initial balance and a recurring annual contribution, with separately chosen contribution and compounding frequencies. Use the nominal balance to track dollars and the inflation-adjusted line to compare purchasing power.
Contribution frequency is separate from compounding
Annual contribution means the total deposited during one year. A $1,200 annual contribution split monthly means twelve $100 deposits, not twelve $1,200 deposits. Start-of-period contributions earn growth during that interval; end-of-period contributions begin earning afterward.
Growth uses the nominal annual interest rate divided by compounding periods. Between deposits, an equivalent fractional-period growth factor connects the two frequencies. This avoids dropping deposits when, for example, weekly contributions and monthly compounding do not share evenly spaced boundaries.
Interpret nominal and real balances
Nominal interest is the final dollar balance minus the initial principal and subsequent deposits. The inflation-adjusted balance divides the nominal result by (1 + annual inflation rate)^years. It is shown separately rather than subtracting nominal deposits from a real balance and calling the difference interest.
The model assumes a constant rate and regular deposits for whole years. Actual accounts may use daily balances, different crediting dates or changing rates. Fees, taxes, withdrawals and investment volatility are not included.
Example: monthly deposits
Starting at zero and depositing $100 at each month-end for one year totals $1,200 in contributions. At 12% nominal annual interest compounded monthly, the projected balance is $1,268.25, including $68.25 of interest. Beginning-of-month deposits would earn an additional month of growth.