Question 1

How is the monthly savings amount calculated?

Accepted Answer

The calculator uses the future value of an annuity formula: M = (FV - PV*(1+r)^n) * r / ((1+r)^n - 1), where FV is your goal, PV is your starting balance, r is the monthly interest rate, and n is the number of months.

Question 2

What interest rate should I use?

Accepted Answer

For a high-yield savings account, 4-5% APY is realistic as of 2025-2026. For index fund investing, use 7-10% as a long-term average. For a regular savings account, 0.01-0.5% is typical.

Question 3

Does this account for compound interest?

Accepted Answer

Yes. Interest compounds monthly at your specified annual rate (APY divided by 12). Each month, the prior balance earns interest, then you add your monthly deposit.

Question 4

Can I calculate how long it takes to reach a goal?

Accepted Answer

Yes — switch to the 'Time to reach' mode: enter your monthly deposit and the calculator tells you how many months until you hit your target.

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