1. What is the Savings Goal Calculator?

The Savings Goal Calculator with Compound Interest helps you determine the future value of your investments or savings by accounting for compound growth. It considers your initial investment, periodic contributions, interest rate, and time period.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( FV \) — Future Value (your savings goal)
• \( PV \) — Present Value (initial investment)
• \( r \) — Interest rate per period (as decimal)
• \( n \) — Number of compounding periods
• \( PMT \) — Periodic payment/additional contribution

Explanation: The formula calculates how your money grows over time with compound interest, including regular contributions.

3. Importance of Compound Interest

Details: Compound interest is often called "interest on interest" and can significantly boost your savings over time. It's the foundation of long-term wealth building.

4. Using the Calculator

Tips: Enter your current savings (PV), expected annual return (r as decimal), number of years (n), and regular contributions (PMT). All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between simple and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus accumulated interest.

Q2: How often should the interest compound?
A: This calculator assumes compounding happens at the same frequency as your payment period. For annual compounding, enter annual rate and years.

Q3: What's a good interest rate to assume?
A: Historical stock market returns average about 7-10% annually, but conservative estimates use 4-6% for planning.

Q4: Can I use this for retirement planning?
A: Yes, this is excellent for estimating retirement savings growth, though actual returns will vary.

Q5: What if I want monthly compounding?
A: Convert annual rate to monthly (divide by 12) and use months for periods (years × 12).