Estimates from the figures entered, not advice. Interest added monthly. Made at aurumwealth.co.uk.
This is not financial advice. The results are estimates worked out from the figures you enter. They assume one interest rate for the whole time, no tax, no fees and no inflation, and a top-up of the same size every month.
Real rates change, and savings accounts and investments differ in how interest is paid and taxed. Real investments can also fall in value. Speak to a regulated adviser if you are unsure.
How the calculation works
Interest is worked out every month. Each month the yearly rate is divided by 12 and applied to your balance, and that interest is added to the pot. Your top-up for the month is then added at the end of the month. Because interest is added to the balance, it earns interest itself from then on. This is called monthly compounding.
The result is therefore a little different from a rate that is applied once a year. Your provider may quote its rate as AER, which already includes the effect of compounding, so a figure entered here may not match theirs exactly.
Things this page leaves out
- Tax. Interest above your allowances can be taxable outside an ISA or pension.
- Inflation. A pot of a given size buys less in future than it does today.
- Rate changes. Most savings rates move. A fixed rate is only fixed for a set period.
- Investment risk. If your money is invested, the value can go down as well as up.