Increasing a monthly deposit feels like it should scale the final result by the same percentage — deposit 20% more, end up with 20% more. That's not quite how it works once there's a starting balance already in the mix.
The Test
Starting from the same $10,000 balance at 6% for 10 years, raising the monthly deposit from $500 to $600 — a 20% increase:
- At $500/month: final balance $100,133.64
- At $600/month: final balance $116,521.58
- Increase in final balance: 16.37% — not 20%
Why the Percentages Don't Match
The final balance is the sum of two components: what the $10,000 starting balance grows into on its own, and what the monthly deposits grow into separately. Raising the monthly deposit only affects the second component — the $10,000 lump sum keeps growing at exactly the same pace regardless of what the monthly deposit is. Because part of the final total is unaffected by the change, a 20% increase in deposits shows up as something less than 20% in the final number — the larger the untouched lump-sum share, the bigger that gap.
When Deposit Timing Matters
Compound interest with monthly deposits typically assumes contributions land at the end of each month — meaning the first deposit doesn't start earning interest until the following month. Depositing at the start of the month instead lets every contribution earn one extra month of interest across the whole timeline, which compounds into a real (if usually modest) difference over long periods. Most calculators, including this one, default to the end-of-month convention since it matches how paychecks and automatic transfers commonly land.
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