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Time to Reach Goal: -
Overview
The Savings Goal Calculator helps you plan your savings journey by estimating the time needed to reach a target amount. By entering your current savings, monthly contribution, expected annual interest rate, and your savings goal, the tool uses the future value of an annuity formula to calculate the number of months (and years) required.
Explanation & Methodology
The calculator uses the future value of an annuity formula:
\( FV = P \times \frac{(1 + r)^n - 1}{r} \)
Where: - \( P \) is your monthly contribution, - \( r \) is the monthly interest rate (annual rate ÷ 12 ÷ 100), and - \( n \) is the number of months.
Your total future savings are given by:
\( \text{Total Savings} = \text{Current Savings} + FV \)
We solve for \( n \) such that the total savings meet or exceed your target savings.
Example Calculation
For example, if you have:
- Current Savings: €1,000
- Monthly Contribution: €200
- Annual Interest Rate: 5% (≈0.4167% per month)
- Savings Goal: €10,000
The tool calculates the number of months required to reach your goal and displays a growth curve.
Frequently Asked Questions
How is the time to reach the goal calculated?
Your monthly contributions grow at a compounded interest rate. The calculator uses the future value of an annuity formula and solves for the number of months required for your current savings plus the future value of your contributions to meet your target.
Can I adjust my inputs later?
Yes, simply update your values and recalculate to see how changes in contributions or interest affect the time to reach your savings goal.
What if my savings goal is already met?
If your current savings already meet or exceed your target, the calculator will show 0 months.