What happens each month
Money Stack applies a consistent order: add scheduled contributions, calculate interest on the new balance, then apply costs. In compound mode the interest stays invested. This timing assumption means a contribution entered for a month earns interest in that same month.
Monthly rate = r / 12
Balanceₘ = (Balanceₘ₋₁ + Contributionₘ) × (1 + r / 12) − Costsₘ
At $100,000, a nominal 12% annual rate, and five years, the engine produces $181,670. It does not use the simple-interest shortcut. At 12 monthly periods, a 12% nominal rate corresponds to roughly 12.68% effective annual growth before costs and taxes.
Check the product terms
- How often is interest credited?
- Is it automatically reinvested or paid out?
- Does a withdrawal or contribution change the rate?
- Are day-count conventions, minimum balances, or early-exit penalties relevant?
Money Stack uses twelve equal monthly periods and rounds monetary values to cents. A bank account, bond, or fund may use a different calendar and is governed by its own disclosure documents.
Why “monthly” is not automatically better
A more frequent compounding schedule matters only alongside the actual rate, fees, access rules, and risk. A lower nominal rate compounded monthly can still produce less than a higher rate compounded less often. Convert both to a comparable effective rate.
Use the official Investor.gov compound interest calculator to cross-check a different compounding frequency. No calculation guarantees future returns.