Like HowStuffWorks on Facebook!

How 401(k) Plans Work

        | HSW

Basic Compound Interest Calculator

This calculator helps you to understand how much money you can accumulate by saving small amounts of money each week in an account. Enter the amount you plan to add to your account each week, and the expected interest rate. The calculator will show you the amount that will accumulate in the account over different time spans.

(Note: This calculator does not take taxes into account. More on the tax topic in a later article.)

Weekly contribution
Enter a small amount of money that you can imagine yourself being able to put aside on a weekly basis. If you can only imagine $5 per week, try it just to see what happens over the long haul.
Interest rate
Enter the interest rate you expect to earn. To give you two ideas, current CD rates run between 5% and 6%, while the stock market has returned an average of 10% or so for many years. 12% is an amount that a shrewd investor might hope to get over a long period of time. For 6%, enter 6 in the entry field.
Click this button to calculate the account value.
Year Value
At the end of 1 year
At the end of 2 years
At the end of 3 years
At the end of 4 years
At the end of 5 years
At the end of 10 years
At the end of 15 years
At the end of 20 years
At the end of 30 years
At the end of 40 years
At the end of 50 years

Run several examples to convince yourself that even small amounts of money, accumulated a week at a time, can add up to huge totals in the long run. This simple realization forms the basis of retirement planning, saving for a child's college education, building a down payment for a new house, etc.


Calculators courtesy of BYG Publishing, Inc.