How compounding frequency changes the result
A 5% yearly rate does not always earn exactly 5% a year. Compounded once a year, 10,000 becomes 16,288.95 after 10 years. Compounded quarterly it becomes 16,436.19, monthly 16,470.09 and daily 16,486.65. The difference is the effective annual rate, often called APY or AER: 5% compounded monthly is worth 5.116% a year, and daily compounding gives 5.127%. When you compare two savings offers, compare their effective rates, not the headline rates. The calculator shows the effective rate for the frequency you choose.
Why regular deposits matter more than the rate
For most savers, the habit of adding money every month does more than chasing a slightly higher rate. Saving 1,000 a month for 30 years at 7% compounded monthly builds about 1.22 million, of which 360,000 is your own money and the rest is growth. Starting ten years later and saving for 20 years at the same rate ends far lower, because the early deposits have the longest time to compound. Tick "deposit at the start of each month" if the money goes in on payday, before interest is added; it earns slightly more than a deposit at the end of the month.
The rule of 72
A quick way to estimate doubling time is to divide 72 by the yearly rate in percent: at 6% money doubles in about 12 years, at 9% in about 8. The rule is an approximation; the calculator gives the exact figure for your rate and compounding. It also works the other way round for inflation: at 3% inflation, prices double in roughly 24 years, so a balance that grows more slowly than prices loses buying power even though the number goes up.
What the calculator assumes
The rate stays the same for the whole term, deposits are made every month without a break, and nothing is withdrawn. Fees, tax on interest and changes in the rate are not included, and a fund or share investment can fall as well as rise, so treat the result as an illustration, not a promise. Islamic savings accounts and sukuk funds pay an expected profit rate rather than fixed interest; you can enter that rate here, but the actual profit can differ. To see what a loan costs instead, use the loan calculator.