Tools

This calculator shows what an investment turns into when the interest it earns is reinvested. It focuses on the four things that move the result the most: the amount you start with, the money you add along the way, how often interest is compounded, and the drag from taxes and inflation. What the results mean Ending balance — the value of the account at the end of the term. Total principal — everything you put in: the initial investment plus all contributions. Total contributions — only the money added after the start. Total interest — the ending balance minus the total principal. Interest of the initial investment / of the contributions — the same total interest, split so you can see how much of it came from the money you started with and how much from the money you added later. Buying power after inflation — the ending balance expressed in today’s money. At 3% inflation over five years, every dollar is worth a little less than 86 cents. How compounding is applied here The rate you enter is treated as the effective annual rate. Each compounding period uses its equivalent rate, (1 + r)^(1/n) - 1, where n is the number of compounding periods per year. That is why 5% compounded annually shows up as a monthly factor of about 0.407% in the monthly schedule: the yearly interest is spread evenly across the twelve months rather than simply divided by twelve. ...