Calculating the future value of a series of monthly contributions uses the future-value-of-an-annuity formula with periodic compounding. For $200 monthly contributions at 5% annual interest compounded monthly, convert to a monthly rate r = 0.05/12 ≈ 0.0041666667 and n = 120 months for 10 years. The future value FV = PMT × [ (1 + r)^n − 1 ] / r. Plugging in PMT = 200, r ≈ 0.0041666667, and n = 120 yields a balance of roughly $31,056 (rounded). This is materially higher than the $24,000 of contributions alone due to compound growth. The calculation illustrates a key planning principle: even moderate regular savings paired with modest returns add up significantly over time.

Interpretations and practical steps: (1) Use this math to set realistic college savings targets — if projected tuition exceeds this balance, increase the monthly contribution or extend the timeline. (2) For near-term goals, consider low-volatility, liquid vehicles; for longer horizons, balanced investments may offer higher expected returns but carry volatility risk. (3) Remember fees and taxes: in tax-advantaged 529-style accounts, qualified withdrawals may be tax-free, improving effective returns versus taxable accounts; in taxable accounts, investment gains may be subject to capital gains taxes, depending on holdings and withdrawal timing. Finally, re-evaluate assumptions periodically: small changes to rate (e.g., 6% vs 5%) or contribution size compound into material differences over a decade, so revisit targets annually.