Key calculations

Future Value (Compound Interest)

The ending balance with compounding is FV = P × (1 + r/n)^(n×t), where P is the principal, r is the annual rate as a decimal, n is the number of compounding periods per year, and t is the time in years.

Effective APY from Nominal Rate

APY = (1 + r_nominal/n)^n - 1 converts a nominal rate compounded n times per year into the effective annual percentage yield, reflecting the true return including compounding.

7-Day Yield

A 7-day yield is normally reported as a simple annualized rate. The calculator first estimates the seven-day return as yield × 7/365, then compounds it: APY ≈ (1 + yield × 7/365)^(365/7) - 1.

Required Principal

To reach a target balance, requiredPrincipal = target / (1 + r)^t, solving the compound interest formula backwards for the starting deposit.

Reference ranges

Money Market Rates

Money market account yields have historically ranged from roughly 0.5% to 5.5% depending on the Federal Reserve rate cycle, with higher rates in rising-rate environments.

7-Day Yields

Money market fund 7-day yields closely track short-term Treasury rates and typically stay within 0.1-0.5% of the Fed funds rate.

Comparison Benchmarks

High-yield savings accounts, 1-year CDs, and Treasury bills are common benchmarks for comparing money market returns.

How to use it

1. 1.Enter principal and periodInput the starting deposit, the time period, and its unit (days, months, or years).
2. 2.Choose the rate typeSelect APY or 7-Day Yield and enter the rate. The calculator converts 7-day yield to an effective APY.
3. 3.Set tax and target optionsEnter a tax rate for after-tax results. Toggle target mode to solve for required principal or rate.
4. 4.Review results and comparisonsCheck the ending balance, interest, effective APY, and the comparison table and chart.