How the projection works
The calculator works month by month. Each month, interest is added to the balance and then your monthly contribution is paid in at the end of the month.
Interest compounds at the frequency you choose. To keep the monthly steps accurate, the annual rate is converted to an equivalent monthly rate: (1 + annual rate ÷ periods a year) raised to the power of (periods a year ÷ 12), minus 1. With monthly compounding, that's simply the annual rate ÷ 12.
Because interest is earned on earlier interest, growth speeds up over time. The longer you save, the bigger the share of your balance that comes from interest.
Worked example
Starting with £5,000 and adding £200 a month for 10 years at 4% a year, compounded monthly, gives a final balance of £36,904.12. You'd have paid in £29,000.00 (£5,000 plus 120 payments of £200), so £7,904.12 is interest.
Limits of the projection
The calculator assumes the interest rate stays the same for the whole period. Savings rates change, and fixed-rate deals usually end after a set term, so treat long projections as a guide.
It doesn't take off tax on interest or allow for inflation, which reduces what your savings will buy in future. It also assumes you make every monthly payment and don't withdraw anything.
Inputs for the savings calculator
Starting balance
How much you have saved already, or the lump sum you're starting with. Enter 0 if you're starting from nothing.
Monthly contribution
How much you'll pay in each month. It's added at the end of each month, after that month's interest.
Annual interest rate
The yearly interest rate on your savings account. The rate shown is only an example, so enter the rate you're offered.
Time period
How many whole years you'll save for, from 1 to 100.
Interest compounds
How often interest is added to your balance: daily, monthly, quarterly or annually. More frequent compounding gives a slightly higher balance at the same rate.
CALCULATOR QUESTIONS
Savings calculator questions
What is compound interest?
Interest paid on both the money you put in and the interest you've already earned. Over time it makes your savings grow faster than simple interest would.
How much will I have if I save £200 a month?
Saving £200 a month on top of a £5,000 starting balance at 4% for 10 years, compounded monthly, gives £36,904.12. Enter your own figures for your result.
Does compounding frequency make much difference?
A little. At the same annual rate, more frequent compounding gives a slightly higher balance, but the rate itself and how long you save matter much more.
Does the result include tax and inflation?
No. The figures are before any tax on interest and aren't adjusted for inflation.