I'm looking for the equation that basically works like this

"Assuming you have X saved, and save Y more a year, and your savings grow at Z percent, you will have S after T years."

  • Look for an annuity calculator such as this: investopedia.com/articles/03/101503.asp#axzz2MX6tV6rt and you will be able to calculate this.
    – JohnFx
    Mar 4, 2013 at 2:11
  • 1
    from what i see, that doesn't take into account a continuously increasing sum -- the "Save Y more a year" part. From what I saw, it only shows how a lump sum grows over time assuming a rate.
    – hvgotcodes
    Mar 4, 2013 at 2:30

1 Answer 1



  • $X is the amount saved as of the beginning of the time period,

  • $Y is the amount contributed at fixed intervals of time (once a month, once a quarter, once a year, whatever), and the contribution is made at the end of the interval


  • during each such interval, the earnings on the account are 100z% for that time period,


  • at the end of the first interval, the account will have $X(1+z)+Y in it

  • at the end of the second interval, the account will have $(X(1+z)+Y)(1+z)+Y = X(1+z)^2 + Y(1+z) + Y in it

  • at the end of the third interval, the account will have
    $(X(1+z)^2+Y(1+z)+Y)(1+z)+Y = X(1+z)^3 + Y(1+z)^2 + Y(1+z) + Y in it

money.SE does not support MathJax and so additional math gets messier, but some people may have recognized the calculations as being the same as what is called Horner's rule or Horner's method for evaluating a polynomial. The polynomial in question is a polynomial with variable t given by

Xt^n + Yt^{n-1} + Yt^{n-2} + .... + Yt + Y

and it is evaluated at t = 1+z. Note that if the periodic contributions are variable instead of being fixed, this is easily accommodated by changing the appropriate coefficient of the polynomial. On the other hand, for fixed contributions, the polynomial in question can be expressed

Xt^n + Y(t^n - 1)/(t-1)

which, when evaluated as t = 1+z gives

X(1+z)^n + Y((1+z)^n-1)/z

as the amount that one will have after n time intervals have elapsed.

  • n is the number of intervals; what is t? And thank you much. I don't get the last equation, particularly about saying t = 1 + z.
    – hvgotcodes
    Mar 4, 2013 at 13:24
  • i created a spreadsheet of this and the values seem reasonable, thanx a bunch
    – hvgotcodes
    Mar 4, 2013 at 13:51
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    t and its powers are place-holders; they don't have any value per se. If n = 3, and the first contribution was $Y, the second $2Y and the third was not made at all, the polynomial would be Xt^3 + Yt^2 + (2Y)t + 0. In a spreadsheet, you won't need t explicitly: the numbers X, Y, 2Y, 0 would be entered into four adjacent cells (array). Then, to find how much money there would be at the end of three periods, substitute 1+z (that is a number like 1.05) for t in the polynomial to get the net sum Mar 4, 2013 at 18:16

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