By MoneyMaths · Prepared 22 September 2026 · How this content is produced
A calculator can be mathematically correct while its future balance never occurs. The calculation tells you what would happen if the inputs held. It cannot establish whether a chosen return, contribution or time period will match your life.
Separate contributions from growth
Start with $1,000, add $100 at the end of every month for ten years, and assume a nominal annual return of 6% compounded monthly. The compound interest calculator produces approximately $18,207.33.
Of that total, $13,000 comes from contributions: $1,000 initially plus $100 × 120 months. Modeled growth accounts for $5,207.33. Keeping the two parts separate helps you see how much the scenario depends on money you add versus the assumed return.
A smooth line hides uneven returns
Consider a different example with no deposits: $1,000 gains 20% in one year, becoming $1,200, then loses 20% in the next, becoming $960. The arithmetic average of +20% and −20% is zero, but the ending balance is 4% below the starting balance. A percentage loss is being applied to a different base.
This is why entering a simple average of historical yearly percentages can be misleading. A constant compound rate is a model assumption, not a reconstruction of an uneven investment path. When contributions or withdrawals occur along the way, the timing of returns also affects the result.
Compare assumptions without inventing probabilities
Run the same contribution plan at 0%, at your chosen base rate and at a lower rate. The zero-growth version of the first example ends at $13,000. It isolates the contribution component, but it is not a worst-case investment outcome: an investment can lose value.
The calculator's lower and higher scenarios illustrate sensitivity. They are not confidence intervals, and the final balance is not guaranteed to fall between them. A longer time horizon does not turn an assumed return into a promise.
Account for costs honestly
The Investor.gov explanation of investment fees describes how transaction and ongoing charges reduce the amount left to invest. MoneyMaths does not calculate a product's full fee schedule or your taxes.
As a simple one-year illustration, $10,000 growing by 6% becomes $10,600 before charges. If a hypothetical 1% charge is then applied to that end-of-year balance, $106 is deducted, leaving $10,494. That is 4.94% growth, not exactly 5%. Actual fee timing and fee bases vary; subtracting two rates is only an approximation for some arrangements.
Match the projection to the decision
If you need a specific amount on a fixed date, compare the required contribution under several assumptions in the savings goal calculator. If you care about what the money can buy, also read the purchasing-power example.
Your next step is to label every assumption: starting balance, deposit timing, contribution amount, nominal rate, compounding frequency and duration. Then note what is excluded. A clear conditional estimate is more useful than a precise-looking number whose assumptions you cannot explain. These examples do not recommend a security or predict investment performance.
Illustrative examples, not individual financial advice. Calculation assumptions · Report an error