Nominal rate versus effective yield
A nominal annual rate is divided across compounding periods. The effective annual yield includes the interest earned on earlier interest within the same year.
Compound-growth laboratory
Compare growth, contributions, compounding, and drag
Model nominal rates across six compounding frequencies, contribution timing, fees, tax drag, purchasing power, simple interest, and an annual account schedule.
Plan with context
Compound interest is a system, not just one formula.
The headline rate is only one input. Frequency, time, deposits, costs, taxes, and purchasing power all influence the value you actually keep.
Compounding frequency
More frequent compounding raises effective yield when the nominal rate stays fixed, although the incremental benefit becomes smaller at high frequencies.
Contribution timing
A deposit made at the beginning of a period has one more period to earn interest than the same deposit made at the end.
Simple versus compound
Simple interest is calculated without earning interest on accumulated interest. The comparison line shows how that difference can widen over longer horizons.
Fees and tax drag
Recurring fees and taxes on positive interest reduce both the current balance and the base available for future growth. Their long-run impact can exceed the charges paid directly.
Inflation and real value
The inflation-adjusted result converts the future balance into today’s purchasing-power terms. It does not predict future prices or inflation.
Included
Six compounding frequencies, monthly or annual deposits, beginning or end timing, fees, tax drag, inflation, simple interest, APY, and an annual ledger.
Not included
Variable rates, changing tax brackets, account limits, penalties, withdrawals, market volatility, or institution-specific day-count conventions.
Use it well
Compare the same nominal rate across frequencies, then stress-test lower rates, higher fees, and different contribution amounts.