1. What is the High Yield Savings Calculator?

This calculator estimates the growth of your savings in an Australian high-yield savings account with daily compounding interest. It helps you project how your money can grow over time with compound interest.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( A \) — Final amount (AUD)
• \( P \) — Principal investment amount (AUD)
• \( r \) — Annual interest rate (decimal)
• \( t \) — Time the money is invested for (years)
• 365 — Number of compounding periods per year (daily)

Explanation: The formula calculates how your money grows when interest is compounded daily, which is typical for Australian high-yield savings accounts.

3. Importance of Compound Interest

Details: Compound interest allows your savings to grow exponentially over time, as you earn interest on both your principal and accumulated interest. This is particularly powerful for long-term savings goals.

4. Using the Calculator

Tips: Enter your initial deposit in AUD, the annual interest rate (e.g., 4.00 for 4.00%), and the number of years you plan to save. The calculator will show your projected balance and total interest earned.

5. Frequently Asked Questions (FAQ)

Q1: What's a typical high-yield savings rate in Australia?
A: As of 2024, rates range from 4-5% APY for top high-yield savings accounts, though rates change with the cash rate.

Q2: How often is interest paid in Australian savings accounts?
A: Most pay interest monthly, though it's calculated daily (daily compounding).

Q3: Are there tax implications for interest earned?
A: Yes, interest is considered taxable income in Australia and must be reported to the ATO.

Q4: What's the difference between APY and APR?
A: APY includes compounding effects while APR doesn't. Savings accounts typically advertise APY.

Q5: Are high-yield savings accounts safe?
A: In Australia, deposits up to $250,000 per account holder per bank are protected by the Financial Claims Scheme.