Quick answer: 20,000 plus 500 a month at 4% compounded monthly earns 7,569.42 interest in 5 years, for an end balance of 57,569.42.
How it's calculated
Each month the balance grows by the monthly equivalent of the effective annual rate, (1 + EAR)^(1/12). Contributions are added at the start or the end of each month or year, as you choose; money added at the start earns one more period of interest.
Interest earned is the end balance minus everything you put in. The value in today's money divides the balance by (1 + inflation)^years, showing what it can buy at today's prices.
For a single deposit with a fixed term, the term deposit calculator shows the APY; to plan towards a target, use the savings calculator.
Worked examples
- 20,000 + 500 a month (end), 4% monthly, 5 years: interest 7,569.42, balance 57,569.42
- Same with deposits at the start of each month: interest 7,679.92, balance 57,679.92
Frequently asked questions
Does contributing at the start of the month make a difference?
A little: each deposit earns one extra month of interest. Over long periods and large amounts the gap grows.
What inflation rate should I use?
Your country's recent consumer price inflation: GASTAT publishes it for Saudi Arabia and the FCSC for the UAE. 2% to 3% is a common long-run assumption.
Is interest taxed?
Not in Saudi Arabia or the UAE for individuals. If you are taxed elsewhere, use your after-tax rate.
How much does adding more each month help?
Each extra amount keeps earning until the end, so regular additions often matter more than the rate, especially in the early years.
Can I use a profit rate for Islamic savings?
Yes. Enter the expected profit rate, but remember the actual profit can differ from the expected one.
What is the real value of my balance?
It is the balance adjusted for inflation, showing what it would buy in today's money. It is what matters for long-term plans.