Calculate how long it will take to reach a savings goal, or find out how much you need to save each month to hit your target by a deadline. Includes interest compounding.
| Account Type | Typical APY (2024) |
|---|---|
| Traditional Savings | 0.01–0.5% |
| High-Yield Savings (HYSA) | 4.5–5.5% |
| Money Market Account | 4.0–5.0% |
| 1-Year CD | 4.5–5.5% |
| 5-Year CD | 3.5–4.5% |
Over typical savings horizons, how much you add each month matters more than the interest rate. Growth from compounding becomes dominant over decades, but for a goal five years out, contributions are almost everything.
This matters for where you put the money: for a short-term goal, chasing return adds risk without much benefit.
Money needed within a couple of years does not belong in the stock market, however appealing the long-run average looks. The average says nothing about any particular two-year window.
A savings account paying less than inflation loses purchasing power even as the balance grows. The nominal number rises while what it buys falls.
This is why cash is appropriate for near-term needs and poor for multi-decade ones.
APY includes the effect of compounding, so it is the figure to compare between accounts. Two accounts quoting the same nominal rate can differ in APY if one compounds daily and the other annually.
Standard guidance is three to six months of essential expenses in accessible cash before saving toward anything else. Without it, an unexpected cost becomes debt and undoes progress elsewhere.