Contribution Timing: Beginning vs End of Period
Two calculators can be given identical inputs and return different answers. Most of the time the reason is this setting: whether the contribution is added at the start of each period or the end. It is a real difference, it has an exact size, and almost no calculator tells you which one it is using.
Short answer
Not a vague advantage — a precise one. With monthly contributions at a 7% annual rate, the beginning-of-month balance is 1 + 0.07/12 times the end-of-month balance, whatever the amounts or the number of years.
What it is worth
$500 a month at 7%, compounded monthly, with nothing to start:
| Period | Contribute at end | Contribute at beginning | Difference |
|---|---|---|---|
| 10 years | $86,542 | $87,047 | $505 |
| 30 years | $609,985 | $613,544 | $3,558 |
Both columns contribute the same $180,000 over the 30 years. The $3,558 gap is purely the extra month of growth each deposit gets, compounded across every deposit — about 0.6% of the final balance.
Why it is smaller than it sounds, and bigger than it looks
0.6% is not going to change anyone's retirement. If you are choosing between paying yourself on the 1st or the 30th, this is not the decision that matters.
It matters for a different reason: it is one of the main reasons two calculators disagree, and people usually assume one of them is broken. When your bank's projection and an online calculator differ by a few hundred pounds on the same inputs, this setting is the first thing to check.
Which setting matches real life?
| Situation | Use | Why |
|---|---|---|
| Standing order on payday, into an account that pays monthly interest | Beginning | The money is in the account for the whole period it earns over |
| Salary sacrifice or workplace pension contribution | Beginning | Usually invested at the start of the payroll cycle |
| Whatever is left at the end of the month | End | The deposit arrives after the period's interest is credited |
| An annual bonus paid in December, modelled yearly | End | It has not been in the account for that year |
| You genuinely do not know | End | The conservative choice — it understates rather than overstates |
In finance textbooks these two are called an annuity due (beginning) and an ordinary annuity (end). The names are worth knowing only because that is how the difference is labelled if you go looking for it elsewhere.
Do not confuse timing with frequency
These are two separate settings and they are often mixed up. Timing is where in the period the deposit lands. Frequency is how often interest is credited. Frequency is the larger effect. Same $500 a month at 7% for 30 years, contributing at the end each time:
| Compounding frequency | Final balance |
|---|---|
| Yearly | $566,765 |
| Quarterly | $601,644 |
| Monthly | $609,985 |
| Weekly | $613,255 |
Moving from yearly to weekly compounding is worth far more than moving the deposit from the end of the month to the start. Both are smaller than changing the rate or the number of years.