bdevy.

Finance

Savings Calculator

Projects savings growth, where inflation decides what the balance buys.

Your numbers

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$
$
%

Result

Months to reach the goal 2 yrs 6 mo
Monthly deposit for your target date $985.62
Interest earned along the way $1,722
Still to save $25,000
You reach 30,000 in 2 yrs 6 mo. To do it in 24 months instead you would need $985.62 a month.

Interest is credited monthly at the annual rate divided by twelve, and deposits are made at the end of each month. Tax on interest is not deducted.

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How the calculation works

A starting balance plus regular contributions, grown at the interest rate over the period. The nominal balance is what the arithmetic produces, and the useful second figure is what it buys after inflation, since a balance that grows more slowly than prices has lost purchasing power.

What moves the number

  • Contribution amount and frequency.
  • Interest rate and compounding.
  • Time horizon.
  • Inflation over the period.

Where this one goes wrong

A savings balance growing at less than the inflation rate is shrinking in real terms even though the number rises, which is the distinction between the nominal and the real figure and the one that matters for anything held over years. Look at both. Regular contributions also matter more than the rate for most savers over practical horizons, since the amount contributed dominates the interest earned at typical balances.

Before you quote

  • Compare nominal growth against inflation over the period.
  • Note that contributions usually matter more than the rate.
  • Check the compounding frequency the rate assumes.

Questions

About this calculator

Can a growing balance lose value?

Yes, if it grows more slowly than prices. The nominal figure rises while purchasing power falls, which is the distinction between nominal and real growth and the one that matters for anything held over years.

What matters more, the rate or the contributions?

The contributions, for most savers over practical horizons, since the amount put in dominates the interest earned at typical balances. The rate matters increasingly as the balance grows and the horizon lengthens.

Does compounding frequency matter for savings?

Modestly. It is worth comparing quoted figures on the same basis, which is what annual percentage yield exists for, since it incorporates the compounding frequency and makes two offers comparable.

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How to use this calculator

  1. Savings goal ($). Enter your own figure; the page starts at $30,000.
  2. Already saved ($). Enter your own figure; the page starts at $5,000.
  3. Monthly deposit ($). Enter your own figure; the page starts at $800.
  4. Annual interest (%). Enter your own figure; the page starts at 4%.
  5. Or reach it in this many months. Enter your own figure; the page starts at 24.

The result updates as you type, so you can try a figure, see what it does to months to reach the goal, and change it back. Nothing you enter is sent anywhere or saved.

A worked example

These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.

What goes in

InputValue
Savings goal$30,000
Already saved$5,000
Monthly deposit$800
Annual interest4%
Or reach it in this many months24

What comes out

ResultValue
Months to reach the goal main result2 yrs 6 mo
Monthly deposit for your target date$985.62
Interest earned along the way$1,722
Still to save$25,000

You reach 30,000 in 2 yrs 6 mo. To do it in 24 months instead you would need $985.62 a month.

How sensitive the answer is

Holding everything else steady and changing only savings goal, this is what happens to months to reach the goal. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.

Savings goal ($)Months to reach the goal
$15,000 1 yr 1 mo
$22,500 1 yr 9 mo
$30,000 example above 2 yrs 6 mo
$45,000 3 yrs 10 mo
$60,000 5 yrs 1 mo

Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.

What each figure means

Savings goal ($)
A money amount, starting at $30,000.
Already saved ($)
A money amount, starting at $5,000.
Monthly deposit ($)
A money amount, starting at $800.
Annual interest (%)
A percentage, between 0 and 50, starting at 4%.
Or reach it in this many months
A number, between 0 and 600, starting at 24.

What the results tell you

ResultWhat it is
Months to reach the goalThe headline result. A number.
Monthly deposit for your target dateA money figure.
Interest earned along the wayA money figure.
Still to saveA money figure.

Rates and terms move

Loan and interest figures assume the rate and term you enter hold for the whole period. Variable rates, fees rolled into the balance and early-repayment terms all change the real cost.

Numbers are only half the job

Good margins still need customers finding you and systems that hold it together. BDEVY covers the marketing, technology and automation side.