This Future Value (FV) calculator tool calculates the future value of any investment. This handy tool is flexible for any periodic investment/withdrawal or, in other words, cash flow (also known as future value with payments). It calculates the future value of an annuity by default but also features other options if you want more than that.
Using the future value calculator
This financial calculator enables you to find the future value of an investment or deposit by entering your initial investment amount, the nominal annual interest rate and how often the interest compounds. You can also choose to add in (or withdraw) regular contributions depending on how frequently these transactions occur.
The output of the FV calculator consists of:
- The final value of the investment.
- the present value (PV) of the investment
- terminal interest, formulas and all growths, as well as amortization, etc
What is “Future value”?
Future value= The monetary value that an investment will be worth at a specific date in future. It assumes that the investment will grow at a certain percentage over time with regard to compounding, contributions and withdrawals. This idea is to give you an idea of what the investment will yield to you in the future and how your money can grow with time. It can be savings account deposits, business ventures, stock markets and/or investment funds.
Future Value Calculator can be handy for allocating your resources. It tells you to pick an investment or Either spend it or invest at a future value point in time. Just as with any math model, future value calculations rely on certain assumptions and forsaking them will yield incorrect results. Strike the common assumption is that the return rate is going to be the same. The result also depends on how well you can predict the interest rate. A minor error in this prediction leads to massive deviations from reality because of compounding.
When we calculate the future value, it is nominally: without interest or other factors that could eventually reduce the actual value of money in a future period.
Future value formula
The basic future value can be calculated using the formula:
FV, which is the future value of an asset or investment. Not PV from FV, this is the present or original value PV is The variable r represents an annual interest rate in decimals, not simply or as APY. The Time ( years) in t, n is the number of years in compounding.
This simple equation drives our software. It is used to figure the future value of an annuity based on an annual interest rate., but it can also be used for monthly, daily, quarterly, and so on cash flows.
Future Value calculation example
Suppose you put $100,000 into an initial investment at a consistent annual interest rate of 14% for 10 years. The cost you want to withdraw is $5,000 at the end of every year. You may wonder what that investment will be worth in the future, at 1, 2, 3, 5, or 10 years or so. The table has the answers to it.
Initial Value | Rate of Return | Number of Years | Yearly Payment | Present Value |
|---|---|---|---|---|
| $100,000 | 14% | 1 | -$5,000 | $109,000 |
| $100,000 | 14% | 2 | -$5,000 | $119,260 |
| $100,000 | 14% | 3 | -$5,000 | $130,956 |
| $100,000 | 14% | 5 | -$5,000 | $159,491 |
| $100,000 | 14% | 10 | -$5,000 | $274,036 |
This demonstration illustrates the mechanics of the time value of money. The future value of an annuity always goes up if we put it off receiving it, but the rate of return and the initial investment are the same. Moderate annual withdrawals of, say, 5% of the initial investment make a real big difference. The annuity’s future value is in excess of more than $370,722, assuming no withdrawals, as compared to taking money out. This is why we should never touch savings accounts and why it is advantageous to reinvest interest.
Financial caution
This is a valuable back-of-envelope calculation for ballparking the long-term value of an investment and resultant compounding you may get from a bank deposit or similar financial instrument — an online tool. But it should not be the last word on that subject like anything. When dealing with long-term agreements that involve banks to keep your money (investments, deposits, etc.), one should do the due diligence and ask a qualified professional. Use the tool insights with care and at your own risk.