Finance & Business
Future Value Calculator
Calculate how much your investment will be worth in the future based on initial investment, periodic payments, interest rate, and time period.
Enter your investment details to see projected future value
Related to Future Value Calculator
The Future Value Calculator helps you determine the potential value of an investment over time, considering initial investment, periodic contributions, interest rate, and investment duration. It uses the compound interest formula combined with periodic payment calculations to provide a comprehensive view of your investment's growth.
The Calculation Process
The calculator combines two key components: the future value of the initial investment (PV) and the future value of periodic payments (PMT). For the initial investment, it uses the compound interest formula: FV = PV(1 + r/n)^(nt), where r is the annual interest rate, n is the compounding frequency, and t is the time in years. For periodic payments, it uses the formula: FV = PMT × ((1 + r/n)^(nt) - 1)/(r/n).
Key Components
The calculator takes into account: initial investment amount, periodic (monthly) contributions, annual interest rate, investment duration in years, and compounding frequency. It assumes that contributions are made at the same frequency as the compounding period and that the interest rate remains constant throughout the investment period.
The calculator provides three key metrics and a visual representation of your investment's growth over time. Understanding these results helps you make informed investment decisions and plan for your financial future.
Future Value
This is the total projected value of your investment at the end of the specified period. It includes your initial investment, all periodic contributions, and the compound interest earned on both.
Total Contributions
This represents the sum of your initial investment and all periodic contributions made over the investment period. It shows how much money you've actually invested.
Total Interest
This shows how much you've earned through compound interest. It's the difference between the future value and your total contributions, representing your investment's earnings.
1. What is future value and why is it important?
Future value is the projected worth of an investment at a specific point in the future. It's important because it helps you understand how your money can grow over time through compound interest and regular contributions, enabling better financial planning and goal setting.
2. How does compounding frequency affect my investment?
Compounding frequency determines how often interest is calculated and added to your investment. More frequent compounding (e.g., monthly vs. annually) typically results in higher returns because interest is earned on previously earned interest more often.
3. Should I include inflation in my calculations?
While this calculator doesn't directly account for inflation, you can adjust for it by using a "real" interest rate (nominal rate minus inflation rate). This gives you a more realistic picture of your investment's future purchasing power.
4. How accurate are the future value projections?
The calculations assume a constant interest rate and regular contributions throughout the investment period. In reality, interest rates may fluctuate, and your contribution amounts might change. Use these projections as a guideline rather than a guarantee.
5. What is the scientific source for this calculator?
This calculator is based on standard financial mathematics principles and formulas established in financial theory. The core calculations use the compound interest formula and the future value of annuity formula, which are derived from mathematical principles documented in financial textbooks and academic literature. The formulas are consistent with those used by financial institutions and are supported by the fundamental principles of time value of money theory, first formalized by Irving Fisher in "The Theory of Interest" (1930) and further developed in modern financial mathematics.