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Learning how to save is one of the most important financial habits to develop. You can use Forbes Advisor’s free savings calculator to determine how your savings can grow. With interest that compounds—that is, you’re earning interest on your interest, not only on your principal—you will see accelerating growth the longer the money is held on deposit.
Using this savings account interest calculator, you can compare how your savings will grow, depending on whether or not you make ongoing deposits after your initial savings deposit.
Tips for how to use our savings calculator appear below—whether you’re making a single deposit or you’ll be making regular additions. We also answer some FAQs.
How To Use This Savings Calculator
To get the most value from this compound savings calculator, gather the numbers you’ll need to input. You can start with as few as three values:
- Starting amount: the amount of money you will deposit at the start
- Years to save: how long you plan to save this money
- Rate of return: the annual percentage yield (APY) you’ll be paid
Although you’ll hear references in the marketplace to high-yield savings, in today’s low interest rate environment, many of the best online savings accounts pay in the neighborhood of 0.50% APY.
Making a Single Deposit
For this example, start with a $5,000 deposit that you plan to save for 10 years, earning 0.50% APY.
The calculator’s default value for how often interest compounds is annually. With a savings account, you may have a monthly or daily compounding frequency, which helps your money grow faster. You’ll need to check these details with your bank or credit union.
Do the math: If you deposit $5,000, and make no additional deposits over the 10-year period, earning 0.50% APY, you’d have $5,256 saved in 10 years: your $5,000 deposit plus $256 earned interest.
Making Additional Regular Deposits
To show how your savings can grow when you add to them regularly, add the following three values:
- Additional contributions: how much you’ll regularly add to your savings
- Frequency: how often you’ll add it (from weekly to yearly)
- Interest: how often your interest compounds (from annually to daily)
With that same $5,000 initial deposit, 10-year savings period and 0.50% APY, now add in that you’ll faithfully contribute $100 per month.
Do the math: By contributing $100 per month, or $12,000 over the 10-year period, you’d have $17,563 saved in 10 years: $17,000 principal and $563 earned interest.
Online Savings Account Promotions for 2021
What is the “magic” of compound interest?
With compound interest, you earn interest not only on your deposit, or principal, but also on the interest it earns. As your interest keeps earning interest, the longer you save, the steeper the growth curve becomes, which is often referred to as the magic of compound interest. The longer your savings are on deposit, the more powerful this compounding becomes.
Where should I keep my emergency savings?
In the event of an emergency, you need to access your savings as quickly as possible. For this reason, a time deposit, like a certificate of deposit or CD, may not be your best choice, as you might incur an early withdrawal penalty. You also want your emergency savings to be safe, so a federally insured saving or checking account is a better choice than, say, the stock market.
What are the best high-yield savings accounts?
To earn the highest APY, you may have to shop around a bit. As of Oct. 18, 2021, the national average savings APY was 0.06%, according to FDIC data. Online banks and credit unions tend to offer the best high-yield savings accounts. In choosing a savings account, you may also want to consider how easy the account is to access, whether in person, online or by phone.
What are some things smart savers do?
Good savers tend to have several behaviors and habits in common. A popular way to develop a solid savings habit is to pay yourself first. That way, you don’t run out of money before you get around to allocating money to savings. You also may want to automate your savings efforts, to be sure they stay on track. Learn six things smart savers do.
With such low interest rates, does saving really matter?
Yes, it does. As you can see in the second example we provided above, when it comes to saving, APY helps your money grow, but, over time, what really makes the difference is that you make saving money a habit. Research has shown that saving regularly contributes more directly to future financial success than the specific APY you earn. Even in a low interest rate environment, it pays to continue saving.