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**Savings Goal Tracker & Setter App**
# When Will I Reach My Savings Goals?

## Current Savings Rates

## What Compounding Frequency is Used?

### What Do Banks Use on Savings Accounts?

### How This Calculator Works

### APR vs APY

### Converting Deposits From One Frequency to Another

## Inflation & Income Taxes Have a Massive Impact on Interest Income

### Calculate Future Value

### Brighton Homeowners May Want to Refinance While Rates Are Low

Want to see how long it will take you to reach your savings goals?

This calculator will estimate how long you need to save to reach your goal. Simply enter your savings goal, how much you already have set aside, how frequently you plan to add deposits, the amount of your deposits, and the interest rate you expect to earn on your savings.

The calculator will automatically update the results when you change any of the input fields.

Most banks typically compound interest daily on savings accounts, adding the amount accrued once each month based on the daily average account balance throughout the preceeding month.

To keep the math simple & straightforward, this calculator compounds interest at the same periodicity at which money is added.

This means if money is frequently added then the annual percentage yield may be higher than the associated annual percentage rate.

However, it should be noted, at lower rates of interest the compounding frequency does not have a big impact on the annual percentage yield APY.

The following chart shows that at 1% APR the compounding frequency has less than 1% impact on the returns.

Taxes and inflation have a far larger impact on both savings & spending power.

Compounding Frequency | 1% APR | 2% APR | 3% APR | 5% APR | 10% APR |
---|---|---|---|---|---|

Annual | 1.000000% APY | 2.000000% APY | 3.000000% | 5.000000% | 10.000000% |

Semiannual | 1.002500% APY | 2.010000% APY | 3.022500% | 5.062500% | 10.250000% |

Quarterly | 1.003756% APY | 2.015050% APY | 3.033919% | 5.094534% | 10.381289% |

Bimonthly | 1.004176% APY | 2.016741% APY | 3.037751% | 5.105331% | 10.426042% |

Monthly | 1.004596% APY | 2.018436% APY | 3.041596% | 5.116190% | 10.471307% |

Semimonthly | 1.004806% APY | 2.019284% APY | 3.043523% | 5.121642% | 10.494134% |

Biweekly | 1.004823% APY | 2.019350% APY | 3.043671% | 5.122062% | 10.495895% |

Weekly | 1.004920% APY | 2.019742% APY | 3.044562% | 5.124584% | 10.506479% |

Daily | 1.005003% APY | 2.020078% APY | 3.045326% | 5.126750% | 10.515578% |

Continuous | 1.005017% APY | 2.020134% APY | 3.045453% | 5.127110% | 10.517092% |

You generally need to either have high rates of interest (in excess of 10%) or need to save money for a long time (decades or more) for compounding frequency to have a big impact on interest.

If you are depositing $51 every 17 days, but your bank compounds interest daily, you can simply convert your deposit amount into the equivalent amount associated with the compounding frequency. For example, 51/17 = $3 der day, so you can enter $3 and select daily in the above and that will tell you how long it will take to save toward a goal even though you were making $51 payments every 17 days.

Here is a table on how to convert from various periodicities. Convert the amount from a periodicity across the top by sliding down to the desired periodicty in the bottom.

Daily | Weekly | Biweekly | Semimonthly | Monthly | Bimonthly | Quarterly | Semiannual | Annual | |
---|---|---|---|---|---|---|---|---|---|

Daily | - | divide by 7 | divide by 14 | divide by 15.21 | divide by 30.42 | divide by 60.83 | divide by 91.25 | divide by 182.5 | divide by 365 |

Weekly | multiply by 7 | - | divide by 2 | divide by 2.17 | divide by 4.345 | divide by 8.69 | divide by 13.03 | divide by 26.07 | divide by 52.14 |

Biweekly | multiply by 14 | multiply by 2 | - | divide by 1.086 | divide by 2.17 | divide by 4.345 | divide by 6.518 | divide by 13.03 | divide by 26.07 |

Semimonthly | multiply by 15.21 | multiply by 2.17 | multiply by 1.086 | - | divide by 2 | divide by 4 | divide by 6 | divide by 12 | divide by 24 |

Monthly | multiply by 30.42 | multiply by 4.345 | multiply by 2.1845 | mutiply by 2 | - | divide by 2 | divide by 3 | divide by 6 | divide by 12 |

Bimonthly | multiply by 60.83 | multiply by 8.69 | multiply by 4.369 | multiply by 4 | mutiply by 2 | - | divide by 1.5 | divide by 3 | divide by 6 |

Quarterly | multiply by 91.25 | multiply by 13.03 | multiply by 6.55 | multiply by 6 | multiply by 3 | multiply by 1.5 | - | divde by 2 | divide by 4 |

Semiannual | multiply by 182.5 | multiply by 26.07 | multiply by 13.03 | multiply by 12 | multiply by 6 | multiply by 3 | multiply by 2 | - | divide by 2 |

Annual | multiply by 365 | multiply by 52.14 | multiply by 26.07 | multiply by 24 | multiply by 12 | multiply by 6 | multiply by 4 | multiply by 2 | - |

Examples

- Convert $10 daily into a monthly amount. $10 * 30.42 = $304.20 per month.
- Convert $2,000 annually into a weekly amount. $2,000 / 52.14 = $38.36 per week.
- Convert $200 biweekly into an annual amount. $200 * 26.07 = $5,214 per year.

For most savers, the difference between APR & APY is quite inconsequential relative to the impact of inflation & taxes.

The difference between APR & APY might cost a fraction of a fraction of a percent of the total interest earned, whereas inflation typically eats at least a percent or two per year (of the ENTIRE amount saved) while taxes often eat 25% or more of the interest earned each year.

The following table shows the impact of compounding frequency on a $10,000 savings at a 2% interest rate, saved over the course of a decade. It also shows how a 2% rate of inflation & a 25% income tax rate have a far bigger impact on total savings than compounding frequency does.

Continuous | Daily | Monthly | Annually | |
---|---|---|---|---|

Future Savings | $12,214.03 | $12,213.96 | $12,211.99 | $12,189.94 |

Interest Earned | $2,214.03 | $2,213.96 | $2,211.99 | $2,189.94 |

APY | 2.020134% | 2.020078% | 2.018436% | 2.000000% |

Taxes Paid | $553.51 | $553.49 | $553.00 | $547.49 |

Interest Earned After Tax | $1,660.52 | $1,660.47 | $1,659.00 | $1,642.46 |

Savings After Tax | $11,660.52 | $11,660.47 | $11,659.00 | $11,642.46 |

Real Savings After Inflation | $9,527.49 | $9,527.45 | $9,526.25 | $9,512.74 |

From the above table you can see that over the course of a decade the difference in compounding frequency on $10,000 of savings might only be $25 or less total, whereas income taxes cost over $500 & inflation ate nearly $2,000 of spending power.

In other words, income taxes had over 20 times the impact as compounding frequency did and inflation had over 80 times the impact. And these numbers are actually a bit under-stated for many investors.

- Income taxes were withdrawn from the above amounts after a decade of compounding. If income taxes were paid on the gains annually then income taxes would have prevented the money from compounding as quickly & would have ate even more of the returns.
- Many core living costs including homes, healthcare and a college education have vastly exceeded the broader general rate of inflation.

You can use our future value calculator to see what a significant impact inflation & taxes have on interest earnings. The calculator makes it quick & easy to subtract income taxes & then convert nominal dollars into real spending power.

We also offer additional savings calculators which allow you to alter the interest compounding periodicity and to accounts for the impacts of taxes and inflation.

US 10-year Treasury rates have recently fallen to all-time record lows due to the spread of coronavirus driving a risk off sentiment, with other financial rates falling in tandem. Homeowners with a steady payment history may benefit from recent rate volatility.