Interpret the simple-compound gap as a reinvestment effect
The difference between the two paths measures what the declared reinvestment convention does under otherwise aligned cash flows. It is not a recommendation for one product and does not mean an account advertises simple interest merely because withdrawals prevent compounding. Compare contribution totals and both interest buckets before focusing on the ending balances.
The inflation-adjusted view divides nominal value by the entered price-growth factor. It does not use live CPI and does not predict personal living costs. Higher nominal return can still produce weak purchasing-power growth when inflation is high. Run timing, tax, inflation, and rate changes independently so the reason for each difference remains visible.
To replace the assumed inflation rate with published U.S. CPI history, use the inflation calculator and preserve the series and observation dates.
Separate initial principal from contributions added later
The opening amount is present from the first modeled period; annual or monthly contributions arrive later according to the selected beginning- or end-of-period timing. Simple interest tracks interest on the applicable contributed capital without adding earned interest to the base. Compound interest adds each period's interest to the balance, so later interest can earn additional interest.
The default audit vector starts with $20,000, adds $5,000 each year, uses 5% for five years, no modeled tax, and 3% inflation. Under the declared timing it produces a $54,535.20 compound ending value and $9,535.20 compound interest, with $47,042.54 in modeled today's purchasing power. These are reproducible example outputs, not expected market returns.
For a deposit's nominal-to-effective annual yield disclosure, use the APY calculator and keep the rate, day count, and term on one basis.
Apply interest, tax, and timing in the declared order
Calculate periodic interest at full precision from the balance eligible for that period. Apply the entered tax assumption to the period's modeled interest after it is computed, then retain the remaining interest under the selected compound path. Beginning contributions earn during their arrival period; end contributions do not. Reversing either convention changes the schedule.
The tax input is a simplified flat reduction on modeled interest, not a tax-return calculation. Actual deposits or investments can have different recognition timing, rates, exemptions, losses, basis, and account treatment. Keep tax at zero when the purpose is a pre-tax mathematical comparison, and label any nonzero rate as an entered assumption rather than a statutory conclusion.
A detailed reinvested schedule can be isolated in the future value calculator with its payment and compounding assumptions shown explicitly.
Keep the interest experiment outside offers and forecasts
The calculator omits market volatility, account fees, defaults, variable rates, penalties, tax forms, and insurance. Simple and compound formulas describe arithmetic, not the legal terms of a deposit or security. A smooth schedule cannot show sequence risk or liquidity.
Use official disclosures and dated statements for real products and obtain qualified advice for material tax or investment decisions. The page is an educational comparison only. It does not recommend a product, promise the default result, determine tax liability, verify deposit insurance, or provide legal interpretation.