Compound Monthly Savings Growth
Project how regular monthly contributions grow over time using the FV function with compound interest.
=FV(annual_rate/12, months, -monthly_contribution, -starting_balance) How It Works
The FV (Future Value) function calculates what your savings will grow to when you make regular monthly deposits into an account that earns compound interest. It accounts for both the growth on your existing balance and the growth on each new contribution.
Syntax
=FV(rate, nper, pmt, pv)- rate - interest rate per period (annual rate / 12 for monthly)
- nper - total number of periods (years * 12 for monthly)
- pmt - payment per period (negative because money flows out)
- pv - present value / starting balance (negative, optional)
Example
$300/month, 5% annual return, 10 years, starting with $1,000:
=FV(5%/12, 120, -300, -1000)Result: $48,292
| Component | Amount |
|---|---|
| Starting balance | $1,000 |
| Total contributions | $36,000 |
| Interest earned | $11,292 |
| Final balance | $48,292 |
That $11,292 in interest came from compounding - earning returns on your returns.
Growth Over Time
| Year | Contributed | Balance | Interest Earned |
|---|---|---|---|
| 1 | $4,600 | $4,744 | $144 |
| 3 | $11,800 | $12,890 | $1,090 |
| 5 | $19,000 | $21,791 | $2,791 |
| 10 | $37,000 | $48,292 | $11,292 |
| 20 | $73,000 | $125,368 | $52,368 |
| 30 | $109,000 | $252,272 | $143,272 |
Notice how interest earned accelerates - compounding does more work over longer timeframes.
Variations
No Starting Balance
Just monthly contributions:
=FV(5%/12, 120, -300)Finding Required Monthly Savings
Use PMT to reverse the calculation - how much per month to reach a target:
=PMT(5%/12, 120, -1000, 50000)This gives the monthly deposit needed to turn $1,000 into $50,000 in 10 years.
Inflation-Adjusted Projection
Use a real return rate (nominal minus inflation):
=FV((5%-3%)/12, 120, -300, -1000)This shows purchasing power in today’s dollars, assuming 3% inflation.
Building a Year-by-Year Table
For each row, use FV with increasing periods:
=FV(5%/12, A2*12, -300, -1000)Where A2 contains the year number (1, 2, 3…).
Setting Up a Savings Projection
| A | B | C |
|---|---|---|
| Monthly Deposit | $300 | |
| Annual Rate | 5% | |
| Starting Balance | $1,000 | |
| Years | 10 | |
| Future Value | =FV(B2/12, B4*12, -B1, -B3) | |
| Total Contributed | =B1B412+B3 | |
| Interest Earned | =B6-B7 |
Pro Tips
-
Use negative signs for pmt and pv - Google Sheets treats outgoing money as negative
-
Monthly vs annual compounding - monthly compounding (rate/12, nper*12) yields slightly more than annual
-
Conservative estimates - using 5-7% for long-term stock market returns (after inflation: 2-4%) is a common baseline
-
Try different scenarios - change one variable at a time to see what has the biggest impact
-
Start date matters less than duration - 30 years of $200/month beats 10 years of $600/month at the same rate
Common Errors
- Forgetting to divide the rate: Annual rate must be divided by 12 for monthly periods
- Positive vs negative signs: PMT and PV should be negative (money you put in), result is positive (money you get)
- Mismatched periods: If rate is monthly, nper must also be in months
- Ignoring fees: Real investment returns are after fees - subtract expense ratios from the rate