How to use
- Choose How much per month or How long.
- Enter the goal, what you have already saved, and either the number of years or the monthly saving.
- Enter an expected annual return and read the result and the year-by-year balance.
Options explained
- Monthly compounding
- Deposits are made at the end of each month and interest is added monthly at the annual rate ÷ 12.
- Already saved
- Existing savings grow at the same rate, which lowers the monthly amount needed.
The formula and some typical amounts
With r = annual return ÷ 100 ÷ 12 and n = the number of months (years × 12, rounded), the monthly deposit is:
deposit = (goal − already saved × (1 + r)^n) × r ÷ ((1 + r)^n − 1)At a 0% return it is simply (goal − already saved) ÷ n, and if your existing savings would grow past the goal on their own it is 0. The How long mode instead steps month by month, balance = balance × (1 + r) + deposit, until the balance reaches the goal.
Monthly saving needed to reach 50,000 starting from nothing:
| Time | 0% | 2% | 4% | 6% |
|---|---|---|---|---|
| 3 years | 1,388.89 | 1,348.80 | 1,309.53 | 1,271.10 |
| 5 years | 833.33 | 793.05 | 754.16 | 716.64 |
| 10 years | 416.67 | 376.73 | 339.56 | 305.10 |
Entering 10,000 under Already saved with the 5-year, 4% case lowers the deposit from 754.16 to about 570, because the 10,000 itself grows to roughly 12,200 over the 60 months.
Frequently asked questions
How much a month to save 50,000 in 5 years at 4%?
About 754.16 a month. You deposit about 45,250 and the rest comes from interest.
How long does 500 a month take to reach 50,000 at 4%?
87 months, or 7 years 3 months.
Does it account for inflation?
No. To plan in today's money, subtract the expected inflation rate from the return you enter.
Privacy
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