1. What is APY with Monthly Deposits?

APY (Annual Percentage Yield) with monthly deposits calculates the future value of an investment that earns compound interest and has regular monthly contributions. It shows the real rate of return accounting for compounding.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( FV \) — Future Value
• \( P \) — Initial principal amount
• \( D \) — Monthly deposit amount
• \( r \) — APY (in decimal form)
• \( n \) — Total number of months (years × 12)

Explanation: The first part calculates compound interest on the initial principal, while the second part calculates the future value of a series of monthly deposits.

3. Importance of APY Calculation

Details: Understanding APY with regular deposits helps in financial planning, comparing investment options, and projecting savings growth over time.

4. Using the Calculator

Tips: Enter initial principal, monthly deposit amount, APY (as decimal, e.g., 0.05 for 5%), and number of years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between APR and APY?
A: APR doesn't account for compounding, while APY does. APY gives a more accurate picture of actual earnings.

Q2: How often is interest compounded in this calculation?
A: The formula assumes monthly compounding, which is standard for most savings accounts.

Q3: Can I use this for retirement planning?
A: Yes, this calculator is useful for projecting regular retirement contributions, though actual returns may vary.

Q4: What if I want to make deposits more or less frequently?
A: The formula would need adjustment for different deposit frequencies (weekly, quarterly, etc.).

Q5: Does this account for taxes or fees?
A: No, this calculates gross returns before taxes or any account fees.