Savings and Compound Interest: How Much Monthly Deposits Grow

Start with $1,000, add $100 at the end of every month, and earn 5% a year with interest added monthly. After 10 years the balance is $17,175.26. You put in $13,000.00; the other $4,175.26 is interest. In the first year that interest came to just $79.04. In the tenth year alone it was $804.06, about ten times as much, while the monthly deposit never changed.

That is compound interest: each month's interest is added to the balance, and from then on it earns interest too. It starts slowly and then gathers pace, which is why time matters as much as the amount you save.

This guide takes the example apart, one input at a time: the monthly deposit, the number of years, the rate, and whether a lump sum beats monthly deposits. Every figure comes from the Savings calculator in Loan Calculator.

What should you compare?

When you compare savings plans or accounts, look at:

• Balance at the end — what the account holds after the last month.
• You deposit — your starting deposit plus every monthly deposit. This part is your own money.
• Interest earned — the balance minus what you deposited. This is what compounding added.
• Interest as a share of the balance — a quick measure of how hard compounding is working. It is low in the first years and climbs with time.
• The rate, and how often interest is added — the calculator adds interest every month. An account that pays yearly, or only at maturity, grows a little more slowly.
• Time — the input that changes the interest most, and the one you cannot get back.

Savings growth at a glance

$1,000 to start, $100 a month, 5% a year:

Deposits grow in a straight line, $1,200 a year. Interest does not: every year it earns on a larger balance, including the interest from all the years before.

1. The monthly deposit: the lever you control

Best for: deciding how much to set aside each month.

Keep the $1,000 start, 5% and 10 years, and change only the monthly deposit:

Doubling the deposit roughly doubles the result, and the interest share stays around 23–24% in every row with monthly deposits. The deposit sets the size of the pot; rate and time decide how much of it is interest. Over ten years, what you put in still does most of the work, so the monthly amount is the first thing to get right.

2. Time: why the last years earn the most

Best for: seeing what starting earlier, or staying longer, is worth.

Same $1,000 and $100 a month at 5%, for longer periods:

Going from 10 to 20 years adds $12,000 of deposits but multiplies the interest by 4.5. From 20 to 30 years, another $12,000 of deposits adds $43,877.62 to the balance. After 30 years, more than half of the money is interest.

Starting earlier has the same effect. $200 a month at 5%, with nothing to start:

• 20 years: $82,206.57
• 25 years: $119,101.73
• 30 years: $166,451.48

Five extra years at the start, from 25 to 30, cost $12,000 more in deposits and add $47,349.75 to the balance.

3. The rate: small differences, big gaps later

Best for: comparing two accounts or deciding whether a better rate is worth moving for.

$1,000 plus $100 a month, at different rates:

Over 10 years, 6% instead of 3% is worth $2,883.80. Over 30 years the same gap is $45,743.51. One point, from 4% to 5%, adds $959.50 over 10 years and $14,975.35 over 30. A rate difference that looks small in a single year becomes large once it compounds for decades.

How often interest is added matters too, though less. Take a single $10,000 deposit at 5% for 10 years:

• Simple interest, never added to the balance: $15,000.00
• Interest added once a year: $16,288.94
• Interest added monthly, as in the calculator: $16,470.09

Monthly compounding at 5% works out to about 5.12% a year. If your account pays interest yearly or only at the end of a term, expect a result slightly below what the calculator shows.

4. Lump sum or monthly deposits?

Best for: someone with savings already in hand, deciding whether to put it in now or spread it out.

Deposit the same $12,000 in two different ways, at 5% for 10 years:

The lump sum ends $4,235.84 ahead, because every dollar earns interest from the first month instead of arriving over ten years. The lesson is not that monthly saving is worse: most people do not have the lump sum. It is that money waiting to be saved earns nothing, so a starting deposit, even a small one, is worth putting in as early as you can.

5. Saving for a goal: a down payment

Best for: turning a target amount into a time frame.

Say you want $60,000 for a 20% down payment on a $300,000 home. You have $5,000 and can save $500 a month at 5%:

At $500 a month, 7 years leaves you $2,745.55 short; 8 years gets you there. Without any interest, the same deposits would need 110 months, 9 years 2 months. Raise the deposit to $700 and six years is enough. The calculator takes whole years, so try one year at a time until Balance at the end passes your target. The down payment and LTV guide shows what that deposit does to the loan.

6. How the calculator works, and how to use it

Best for: running your own numbers and knowing what is behind them.

Each month the calculator takes the balance × the annual rate ÷ 12, rounds it to the cent, and adds it to the balance. Then it adds that month's deposit. The deposit arrives at the end of the month, so it starts earning in the following month. In the first month of our example, $1,000 earns $4.17 and the $100 deposit takes the balance to $1,104.17. The screen describes it as "Compound interest on a starting deposit plus a monthly top-up, interest added monthly."

1. Open the Tools tab and tap Savings. The More tools screen opens with savings selected.
2. Fill in Starting deposit and Deposit each month. One of them can be empty, but not both.
3. Enter the Annual interest rate (%/year). It starts at 4% for dollars and 5% for đồng; the screen does not copy the rate from your loan.
4. Enter Years, from 1 to 100. It starts at 10.
5. Tap Calculate to see Balance at the end, You deposit and Interest earned.

More tools is part of Pro. Without Pro you can unlock the savings, credit card, car lease and payment frequency calculators together for 24 hours with 2 credits. Taxes, fees and inflation are not included; as the screen puts it, "Estimates only. Banks may use daily interest, fees and their own rounding."

Which savings plan should you choose?

FAQ

Does the calculator add interest monthly or yearly?

Monthly. Each month's interest is the balance × annual rate ÷ 12, added to the balance before the next month. At 5%, that is equivalent to about 5.12% a year. An account that adds interest once a year ends slightly lower: $16,288.94 instead of $16,470.09 on $10,000 over 10 years.

When is the monthly deposit added?

At the end of each month, after that month's interest. So the first deposit starts earning in the second month. $100 a month with no starting deposit gives $15,528.27 after 10 years at 5%.

How long does it take to double my money?

The rule of 72 says divide 72 by the rate: 12 years at 6%, 14.4 years at 5%. With monthly compounding it is a little faster. $10,000 at 6% passes $20,000 in month 139, 11 years 7 months; at 5% it takes 167 months. In the calculator, 12 years at 6% gives $20,507.46.

Should I save or pay off my loan first?

Compare the rates. Paying down a loan saves its rate on the money you repay, with certainty, while savings earn the account's rate. A card at 22.99% costs far more than a 5% account earns; see paying a card minimum vs a fixed amount. On a cheaper loan the answer is closer, and keeping an emergency fund comes first. Extra monthly payments show what the loan side is worth.

Does the result include tax or inflation?

No. It shows the balance before any tax on interest, account fees or inflation. Enter the rate your account actually pays, and treat the result as an estimate of what the account will hold, not of what that money will buy.