About Compound Interest Tools

About

About Compound Interest Tools

CompoundInterestTools.com publishes free calculators and learning resources for understanding compound growth. Articles are published under the Compound Interest Tools name. Results are educational estimates based on the assumptions shown, rather than product quotes or personal financial advice.

How calculations are produced

The main calculators share one calculation engine. For a nominal annual rate r with n compounding periods, the monthly growth factor is (1 + r/n)^(n/12). Continuous compounding uses exp(r/12). An effective annual rate, such as AER or APY, uses (1 + r)^(1/12); it already includes compounding.

The engine processes deposits, interest, deductions and withdrawals month by month. Monthly cash flows happen at the selected beginning or end of a month. Annual cash flows happen at the beginning or end of each year. Weekly payments are approximated as 52/12 payments each month. Daily compounding assumes 365 days per year and does not model leap years or individual bank crediting rules.

Comparisons, deductions and limits

Simple interest is calculated on contributed capital that remains in the account, without earning interest on past interest. Withdrawals and fees reduce this capital proportionally. Both comparisons use the same requested cash-flow schedule and deduction settings. Actual withdrawals may differ if one method runs out of funds.

The tax option deducts the entered percentage of positive monthly interest. Fees use the entered annual percentage divided by 12 and are capped at funds available. These settings do not model tax allowances, loss relief or product-specific fees. Inflation adjustment divides the final balance by the assumed increase in prices.

Zero duration produces no interest or cash flows. Terms are limited to 100 years; nominal and effective annual rates must be greater than -100% and no more than 1,000%. Very large results are rejected. The simpler Excel template supports 0 to 30 whole years and monthly deposits.

Checking results and reporting errors

The calculation code is checked against independent compound-growth formulas and examples covering payment timing, zero periods, withdrawals, tax and fees. Guide tables state their rate and payment assumptions. If you find a discrepancy, send a correction with reproducible inputs. Product terms can differ from this model.

Sources and publication

Guides link to sources where factual claims need support. Update dates indicate changes to the page, rather than a guarantee that investment returns or tax rules will stay the same. Read the disclaimer and privacy policy.