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How this calculator works
Compound interest is the process of earning interest on both your original money and previous interest. The calculator applies a monthly compounding model because that is a practical approximation for many savings accounts and investment projections. It does not guarantee returns or account for fees, tax, inflation or investment losses.
Worked example
Change the default figures to match your situation, then run the calculation. For planning, test at least three scenarios: a conservative case, a likely case and a stretch case. This helps avoid relying on one optimistic number.
Common mistakes
- Using headline rates without checking fees or eligibility.
- Ignoring inflation, tax treatment or future income changes.
- Comparing monthly cost only, without checking total cost over time.
FAQs
Is this financial advice?
No. CalcBudget provides educational estimates only.
Why might my actual result differ?
Providers use their own rates, rules, fees and eligibility checks. Treat this as a planning estimate.