See how rate, frequency, contributions, and time interact — and why a projection is not a promise.
Growth on top of growth
Simple interest applies only to the original principal. Compound interest adds earned interest to the balance, so later interest is calculated on a larger amount. The difference becomes more visible as the term gets longer.
Separate the four assumptions
The principal is where you start; the nominal annual rate drives growth; compounding frequency determines how often interest is added; contributions add new money. Changing one assumption while holding the others fixed makes comparisons meaningful.
Use a projection carefully
A calculator normally assumes a constant rate and regular contributions. Real accounts may charge fees, apply taxes, change rates, or use a different contribution timing. For purchasing-power planning, compare the nominal projection with an inflation estimate rather than treating the final balance as future spending power.