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Compound Savings Calculator

Savings Calculators | Compound Savings Calculator

(more calculators)

Consistent investments over a number of years can be an effective strategy to accumulate wealth. Even small additions to your savings add up over time. This calculator demonstrates how to put this savings strategy to work for you.

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Definitions

Starting amount
The starting balance or current amount you have invested or saved.

Years
The total number of years you are planning to save or invest.

Additional contributions
The amount that you plan on adding to your savings or investment each period. The investment period options include weekly, bi-weekly, monthly, quarterly and annually. This calculator assumes that you make your contributions at the beginning of each period.

Rate of return
The annual rate of return for this investment or savings account. The actual rate of return is largely dependant on the type of investments you select. From January 1970 to December 2007, the average compounded rate of return for the S&P 500, including reinvestment of dividends, was approximately 11.4% per year (source: www.standardandpoors.com). During this period, the highest 12-month return was 61%, and the lowest was -39%. Savings accounts at a bank can pay as little as 1% or less.

It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that funds and/or investment companies may charge.

Compounding
Earnings on an investment's earnings, plus previous interest. This calculator allows you to choose the frequency that your investment's interest or income is added to your account. The more frequently this occurs, the sooner your accumulated earnings will generate additional earnings. For stock and mutual fund investments, you should usually choose 'Annual'. For savings accounts and CDs, all of the options are valid, although you will need to check with your financial institution to find out how often interest is being compounded on your particular investment.

Latest Banking Articles

CD laddering explained
By laddering your certificates of deposit (CDs) you can have a relatively constant flow of money to allow you to take advantage of current interest rates. Find out what CD laddering is, how it works, and ways you can use it to your advantage, even with modest amounts of money. Read more

Health savings accounts (HSAs) explained
Health savings accounts (HSAs), when matched with high deductible health plans (HDHPs), can help you control medical expenses. HSAs can be a wonderful supplement to certain health insurance programs for a few reasons. Read on for tips that should help you understand how to best use HSAs. Read more

Banking fact or fiction, part III
The banking industry seems to spawn more myths and lesser known facts than many others. Knowing the difference will save or make you more money. Here are some things to look for and/or avoid when dealing with a savings account, checking account, money market account, or certificate of deposit. Read more

All about certificates of deposit
Available since 1961, certificates of deposit didn't enjoy wide popularity until the mid-1970's, when inflation was rampant. Read on for an explanation of exactly what certificates of deposit are, how they work, and when you should consider purchasing one or more of them. Read more

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Latest Banking Tips

Online banking gaining popularity
A recent study showed an increase in the number of U.S. households that use some form of online banking. Will the trend continue? Read more

Always avoid late payments
It happens to everyone at some point in life. As soon as you know you can't cover all of the bills due, make a priority list. Read more

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Banking FAQs

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Note: This information is for general use only. Use this information as part of a full research process. General financial advice does not always apply directly to individual financial matters. Please consult a financial expert with specific and complex questions about your individual situation.

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