How monthly compounding works
The calculator divides the entered nominal annual rate by 12. Each month, the existing balance grows by that monthly rate. Contributions are treated as equal deposits made at the end of each month.
Contributions and estimated growth
Total contributions equal the initial amount plus every monthly deposit. Estimated growth is the ending balance minus those contributions. At a zero rate, the ending balance is simply the sum contributed.
Trace one month to check the inputs
Suppose the initial balance is $10,000, the nominal annual rate is 6%, and the monthly contribution is $200. The monthly rate used here is 6% divided by 12, or 0.5%. The first month adds $50 of estimated interest to the existing balance, then the assumed end-of-month deposit brings it to $10,250. The next month starts from that new balance. This trace helps detect an accidentally entered 0.06% rate, an annual contribution entered as a monthly amount, or a product that credits interest on a different schedule.
Run a zero-rate case as a second check: after one year, $10,000 plus twelve $200 contributions should equal $12,400. Then compare conservative, expected, and lower-than-expected rate scenarios instead of treating one projection as a forecast. If deposits occur at the beginning of each month, the result will differ because each contribution has one additional month to grow.
Important assumptions
The rate remains constant, every contribution arrives on schedule, and there are no taxes, fees, withdrawals, inflation, or market losses. Actual investment returns vary and can be negative; a quoted savings yield may also use a different compounding or annual percentage yield convention.
Choose the tool that matches the quoted rate
Use the High-Yield Savings Calculator when a deposit account publishes APY. Use the Investment Return Calculator to measure gain from beginning and ending values instead of projecting a future rate. The APR, APY, and interest-rate guide explains why those inputs cannot be substituted without changing the result.
This educational projection is not financial or investment advice and does not promise a return. Verify product terms and consider qualified advice for important decisions.