Compound Interest Scenario Comparator
Compare up to four constant rate savings scenarios with monthly deposits, compounding frequency, and a simplified tax on positive monthly interest.
Enter amounts in USD, the displayed currency. No conversion is performed.
Earlier editorial review
- Reviewed
- 2026-09-21
- Methodology
- 1.1
Sources
How it works
Enter an initial amount, monthly contribution, nominal annual rate, duration, compounding frequency, and whether to apply the simplified taxable setting. Add up to four scenarios for comparison.
The selected frequency determines an annual growth factor. The model converts it to a monthly rate, applies monthly growth to the opening balance, deducts modeled tax from positive interest when selected, and adds the deposit at month end.
For each scenario, results show ending value, total contributions, net interest after modeled tax, and cumulative modeled tax. The difference compares the highest and lowest valid ending values.
The duration is rounded to a whole number of months and capped at 100 years. Rates stay constant. The taxable setting is a mathematical assumption, not a tax treatment recommendation.
Step by step
- Enter the amounts, rate, duration, frequency, and tax setting.
- Review the ending value, contributions, interest, and modeled tax.
- Add scenarios and compare one changed assumption at a time.
Worked example
Enter an initial amount of $1,000, a $100 month end contribution, a 12% nominal annual rate, monthly compounding, and one year. Leave the taxable option off.
The result is $2,395.08 from $2,200.00 of contributions and $195.08 of modeled interest. With the taxable option on and a 25% rate, the result is $2,344.57, with $144.57 of net interest and $48.19 of modeled tax.
When to use this calculator
Use this calculator to compare up to four fixed rate accumulation scenarios and see how their inputs change the calculated ending balances.
Choose another model for changing market returns, irregular deposits, inflation adjusted goals, or withdrawals. This calculator does not simulate those events.
Common mistakes
Do not mix a quoted annual percentage yield with a nominal annual rate without checking the product disclosure. APY already includes compounding, while this input treats the rate as nominal and applies the selected frequency. Mixing those conventions can count compounding twice.
Avoid treating the taxable toggle as a complete tax model. Capital gains, interest, dividends, and retirement withdrawals can receive different treatment. Run a range of rates and tax assumptions, then confirm the applicable account rules independently.
Calculation method
n = selected compounding frequency
A = (1 + annualRate / 100 / n)^n
monthlyRate = A^(1 / 12) − 1
monthlyBalance = openingBalance + interest − modeledTax + monthEndContribution
The taxable setting subtracts the entered percentage from positive monthly interest only. Contributions are added after growth and modeled tax. Years are rounded to the nearest month, with a 100 year maximum. This is a monthly scenario model, not a tax rule.
Limitations and assumptions
The model assumes a constant nominal annual rate and contributions at month end. The selected compounding frequency determines an equivalent monthly rate. When tax is enabled, the entered percentage is deducted from positive monthly interest. When disabled, no tax is modeled. It does not calculate changing market returns, fees, inflation, tax lots, distributions, contribution limits, or tax on withdrawals. This is a scenario calculation, not a country specific tax calculation or forecast.
Key terms
- Compound interest
- Interest calculated on an opening balance that may include earlier interest credited to the account.
- Compounding frequency
- The number of times per year used to convert the nominal annual rate into a monthly growth rate.
- Tax assumption
- A simplified setting that subtracts the selected percentage from positive monthly modeled interest only.
Compare alternatives
Use DCA vs Lump Sum to compare contribution timing across changing purchase prices. Use Savings Goal Planner to solve for a deposit needed for a target balance. Those tools answer different questions from this fixed rate comparison.
This model applies a constant nominal annual rate and monthly deposits. It does not simulate market prices, irregular deposits, withdrawals, or inflation adjusted spending.
FAQ
What is compound interest?
The calculator turns the selected nominal annual rate and compounding frequency into an equivalent monthly growth rate. Each month it applies growth to the opening balance, applies the selected tax assumption to positive interest if taxable, then adds the contribution at month end.
What does the compounding frequency change?
Annual, quarterly, monthly, or daily frequency changes the effective annual growth implied by the same nominal annual rate. The difference is usually more visible over longer horizons. Compare rates on the same nominal basis because an effective annual yield already includes compounding.
What does the taxable setting represent?
The taxable switch is a simplified monthly illustration. It subtracts the entered percentage only from positive modeled interest before the next month. It is not a country specific tax calculation, a full tax estimate, or a withdrawal tax model. The untaxed option simply omits modeled tax during accumulation.
Is modeled tax the same as tax due?
No. The ending value difference reflects both modeled tax deductions and the later growth those deductions no longer earn. It is a scenario comparison, not a tax bill or an estimate of actual tax owed.
Can I compare more than 2 scenarios?
Yes. Add up to four scenarios. Each can use its own starting amount, monthly deposit, rate, duration, compounding frequency, and taxable setting. Change one assumption at a time to see its effect on the calculated ending values.
Related tools
Use DCA vs Lump Sum to compare purchases made at changing prices, Savings Goal Planner to calculate deposits for a target balance, or Monte Carlo FIRE Simulator to explore retirement withdrawals with variable returns.