Future value of savings: How we calculate
Formulas, rounding and assumptions for this calculation.
How we calculate
Each month, interest and contributions are applied in the selected order. Monthly compounding; gain = ending balance − all contributions. Negative returns and market losses are outside this model.
Monthly rate = entered annual rate / 12. A start-of-month contribution earns interest that month; an end-of-month contribution starts earning it next month. Interest rounds to cents and compounds monthly. Results are before taxes and fees; constant returns are an assumption, not a forecast. Negative returns are not modelled.
Worked example
Start with €1,000, add €100 per month, use a 6% annual rate and a one-month term. Monthly rate = 6% / 12 = 0.5%. An end-of-month contribution gives €5 interest and €1,105 total. A start-of-month contribution gives €5.50 interest and €1,105.50 total. Contributions total €1,100 in both cases; the remainder is interest before tax.