An effective annual rate already includes compounding
At 5% effective annual growth, 10,000 becomes 10,500 after one year without contributions. The annual factor is G = 1 + 0.05. Its equivalent monthly rate is G^(1/12) − 1. Dividing 5% by twelve and then compounding monthly describes a different, nominal-rate scenario; it must not be applied to APY or AER again.
A nominal annual rate needs a compounding frequency
For 5% nominal annual interest compounded monthly, G = (1 + 0.05/12)^12. That gives an effective annual rate of approximately 5.116190%. With 10,000 initially and 100 at each month end over ten years, the balance is 31,998.32. At 5% effective annual growth, the otherwise identical scenario gives 31,725.26. The difference comes from the annual-rate convention, not extra contributions.
Keep the assumptions together
US annual percentage yield (APY) already includes compounding. Enter it as an effective annual rate. For a nominal annual interest rate, choose its stated compounding frequency instead. This investment calculator models constant growth only: it does not select securities or forecast returns. Read the equivalent annual and contribution-period rates beside the result. Rates are constant hypothetical inputs, not quoted offers or predictions. Fees, taxes and changing market returns are excluded. When comparing scenarios, change only the contribution amount or rate and keep the basis and payment timing explicit.