Future Value Calculator
FV Formulas
Lump Sum:
FV = PV x (1 + r/n)^(nt)
With Payments:
FV = PMT x [(1+r)^n - 1] / r
Continuous:
FV = PV x e^(rt)
Quick Examples
$10K at 7% for 30 years
= $76,123
$500/mo at 7% for 30 years
= $566,765
Both combined
= $642,888
Understanding Future Value
What is Future Value?
Future Value (FV) is what your money will be worth at a specific point in the future, assuming a certain interest rate and compounding frequency. It is a fundamental concept in finance and helps you understand the time value of money.
The Time Value of Money
A dollar today is worth more than a dollar tomorrow because you can invest it and earn interest. Future value calculations help you compare money across different time periods.
Compounding Frequency
How often interest is calculated and added to your balance affects your final amount. More frequent compounding means more growth.
| Compounding | Times/Year | $10,000 at 6% for 10 Years |
|---|---|---|
| Annually | 1 | $17,908 |
| Semi-annually | 2 | $18,061 |
| Quarterly | 4 | $18,140 |
| Monthly | 12 | $18,194 |
| Daily | 365 | $18,220 |
| Continuous | Infinite | $18,221 |
Key Factors Affecting Future Value
Principal Amount
The larger your initial investment, the more you will earn in absolute terms. Even small additional amounts can make a big difference over time.
Interest Rate
Higher rates lead to exponentially higher future values. A 2% difference can mean hundreds of thousands over decades.
Time Period
Time is the most powerful factor due to compounding. Starting early gives your money more time to grow exponentially.
Regular Contributions
Adding money regularly amplifies growth significantly. Even small monthly additions can dramatically increase your future value.
FV vs PV: Two Sides of the Same Coin
Future Value
How much will my money grow to? Use FV when you know how much you have now and want to see what it becomes.
Present Value
How much is a future amount worth today? Use PV when you know a future goal and want to know what to invest now.
Important Considerations
These calculations assume a constant interest rate. In reality, investment returns fluctuate year to year. Use conservative estimates for financial planning and remember that inflation reduces the purchasing power of future dollars.
Frequently Asked Questions
What is future value and how is it calculated?
Future value is what your money will be worth at a specific point in the future, assuming a certain growth rate. For a lump sum: FV = PV x (1 + r)^n, where PV is present value, r is interest rate per period, and n is number of periods. For regular contributions, the formula also accounts for each payment growing over time.
How does compounding frequency affect future value?
More frequent compounding leads to higher future values because interest earns interest more often. For example, $10,000 at 6% for 10 years yields about $17,908 with annual compounding but $18,194 with monthly compounding. The difference grows larger with higher rates and longer time periods.
What is the Rule of 72?
The Rule of 72 is a quick way to estimate how long it takes to double your money. Divide 72 by your expected annual return. At 8% returns, money doubles in about 9 years (72/8=9). At 6%, it takes 12 years. This approximation works best for rates between 6-10%.
Should I invest a lump sum or make regular contributions?
Mathematically, lump sum investing usually wins if you have the money available, as it gives your money maximum time to grow. However, regular contributions (dollar-cost averaging) reduce timing risk and are more practical for most people who invest from their paychecks. The best approach is often: invest lump sums when available, plus contribute regularly.