How the growth is built
Four things decide how much a deposit becomes. Here is each one, and how it adds up.
The amount you put in at the start. This is the principal that begins earning interest right away.
your depositThe quoted yearly interest rate. The higher the rate, the faster the balance builds, though so does the tax on it.
% per yearHow often interest is added back to the balance. More frequent compounding earns a little more at the same rate.
yearly to dailyBanks take a 20 percent final tax on time deposit interest, unless the deposit is held five years or more.
20% or exemptHow the balance compounds
patient moneyCompound interest is interest earned on both your original deposit and the interest already added to it. Each round joins the balance, so the next round is calculated on a slightly larger figure. The opening deposit is the principal that starts earning right away, and the annual rate is the quoted yearly figure your bank pays. A higher rate builds the balance faster, though it also raises the tax taken from the interest.
For a lump sum the maturity value is the principal times one plus the rate divided by the compounding count, raised to that count times the years. Compounding frequency is how often interest is folded back in, anywhere from yearly to daily, and more frequent compounding earns a little more at the same rate. As an example, ₱100,000 at 5 percent compounded yearly for 3 years grows to about ₱115,763. You can also add a monthly top-up to see regular saving sit alongside the lump sum.
Interest from an ordinary peso time deposit is not fully yours. Banks deduct a 20 percent final withholding tax before the interest reaches you, so the calculator lets you switch that on or off to see both figures. Deposits held for five years or more are exempt, while pre-terminating one early brings back a graduated tax. If your money sits in Pag-IBIG instead, where dividends are tax-free and declared yearly, the MP2 savings calculator matches that program more closely.
Questions people ask
answered in plain wordsCompound interest is interest earned on both your original deposit and the interest already added to it. Because each round of interest joins the balance, the next round is a little larger. Over a long enough term, this is what makes savings grow faster than a fixed amount each year.
The maturity value of a lump sum is the principal times (1 + r divided by n), raised to the power of n times the years, where r is the annual rate and n is how many times a year interest is compounded. For example, ₱100,000 at 5 percent compounded yearly for 3 years grows to about ₱115,763. This calculator does the same, and also handles a monthly top-up.
Yes. Banks deduct a 20 percent final withholding tax on the interest from an ordinary peso time deposit before it reaches you. Long-term deposits held for five years or more are exempt, and pre-terminating one early brings back a graduated tax. Turn the tax option on or off to see both figures.
A little. The more often interest is compounded, monthly or daily instead of yearly, the sooner interest starts earning its own interest. At the same quoted rate, daily compounding ends slightly higher than yearly, though the gap is small at ordinary deposit rates. You can compare them by changing the frequency in the options.
This tool is for any deposit at a rate you choose, such as a bank time deposit or a high-yield savings account. The MP2 calculator is specific to Pag-IBIG's MP2 program, which pays a yearly dividend rather than a fixed rate and whose earnings are tax-free. Use whichever matches where your money actually is.
No. Every calculation runs privately on your device. Nothing you type is stored, tracked, or sent to a server.