Formula
Interest is compounded monthly. Each month adds rounded interest, then the contribution. The clock stops in the first month the balance reaches the goal.
Next balance = balance + rounded monthly interest + contribution
A zero rate simply divides the remaining gap by the contribution.
Assumptions
- Interest compounds monthly and is rounded to the nearest cent.
- The contribution does not change.
- The search stops at 50 years.
Worked example
Saving $20,000.00 from $4,000.00 at $300.00 a month and 4% takes 4 years and earns $1,880.70.
Input definitions
- Already saved
- Money counted toward the goal before the next contribution.
- Monthly contribution
- The amount added after each month’s interest.
Limitations
This does not include taxes on interest or a change in the savings rate.
Questions
What if I have already reached the goal?
The result is “Already saved” and no further months are counted.
Why might a small contribution fail?
If interest and the contribution cannot close the gap within 50 years, the contribution needs to be higher.