Every assumption has a place
The monthly cent ledger, equivalent growth convention, goal solver and limitations, explained.
A ledger you can follow.
The starting balance and deposits are rounded to Canadian cents. For a nominal annual rate r and n compounding periods, equivalent monthly growth is (1 + r/n)^(n/12) − 1, with r expressed as a decimal. This convention supports monthly deposits when the selected compounding frequency is annual, quarterly, monthly or 365-day.
The order of a month matters.
- Add the deposit first if you chose start-of-month timing.
- Calculate interest on the balance and round it to cents.
- Remove the chosen tax percentage of that month’s interest, also rounded to cents.
- Add the deposit if you chose end-of-month timing.
- Deduct the monthly fee, capped at the money available. This model does not create an overdraft.
The ending balance always reconciles to starting money + deposits + interest − modelled interest tax − modelled fees. An annual deposit increase first applies in month 13. Inflation-adjusted amounts divide the nominal balance by (1 + inflation)^(months/12). They describe purchasing power under your assumption, not another bank balance.
The goal worksheet.
The goal solver tests cent-sized monthly amounts against the same ledger, then finds the smallest supported amount that reaches at least the target. A zero deposit is possible when starting money and assumed interest already reach the goal. The search does not determine what your budget can afford.
Different tools use different conventions.
The debt tool charges APR/12 interest monthly and caps the last payment at the remaining balance. Retirement accumulation and withdrawals use an annual effective return converted to monthly growth, month-end deposits before retirement, month-end withdrawals afterward, and an annual withdrawal increase beginning in month 13. It flags the first month the pot cannot fund the requested withdrawal.
Boundaries and limitations.
Savings horizons are limited to 720 months; starting savings to $100 million and monthly deposits to $1 million. Extreme results are stopped with an explanation. The savings model uses nonnegative interest, so it is not a market-loss simulator. Taxes, daily bank balances, leap years, variable rates, contribution limits, fees outside the selected assumption, market risk and eligibility are not inferred.