What is Future Value Calculator?

The future value calculator is a simulation that determines an investment’s future value. It calculates how much your money will be worth in the future. A future value compound interest calculator is a helpful tool for calculating the value of any investment at a future date.

The initial investment, interest rate, and period number are entered in the future value calculator’s formula input box. The online future value calculator will show you how much your investment will be worth in the given future time.

Other Calculators : –Stock Average Calculator

What is Future Value?

Future value is the utility of cash or an asset at a particular date in the future. It shows you the amount to which a current asset would grow over some time.

The future value is a crucial concept as it shows you the value of your current savings in the future. You get an idea of how much an investment today is worth in the future.

The future value is important to both investors and financial planners, as they may estimate how much an investment today is worth in the future. It helps investors make sound financial decisions based on their financial goals.

Understanding the concept of future value helps you to earn a return above inflation. Inflation is the climb in the prices of goods and services over some time.

Your investment must beat inflation over the long-term if you want to achieve crucial financial goals, such as buying a car or accumulating a corpus for children’s higher education and marriage.

Future value is significant for a business. If you invest money in a new project, it is essential to know the return on investment. Future value helps you to calculate the potential return from the project.

How does Future Value Calculators work ?

The future value calculator calculates the future value (FV) of an investment for a series of regular deposits, on a set rate of interest (r), and the number of years (t).

You must use the mathematical formula:

A = PMT ((1+r/n)^nt – 1) / (r/n))

(The formula assumes the deposits are made at the end of each period such as month or year).

A = Future Value of the Investment
PMT = Payment amount for each period
n = Number of compounds per period
t = Number of periods the money is invested

For example, you deposit Rs 10,000 per month (The deposit is made at the end of each month) at an interest rate of 8% compounded monthly. (This is 12 compounds per period). You may calculate the value of the investment after 10 years as follows:

PMT = Rs 10,000
n = 12 (Number of compounds per period is 12 for monthly compounding)
t = 10 years

A = (10,000(((1+0.08/12)^(120) – 1) / (0.08/12)))
A = Rs 18,29,460.

You have the mathematical formula if deposits are made at the beginning of each period:

A = PMT (((1 + r/n)^(nt) – 1) / (r/n)) * (1+r/n)

Let’s do the calculation with the same figures as above.

A = 10,000 (((1+0.08/12)^120 -1) / (0.08/12) * (1+0.08/12)

A = 18,17,345

Why should I check the future value calculator ?

The future value of an investment tells the investor how much money they would get when their investment matures. For example, assume that you have kept aside some money and want to use it to buy a car worth ₹10 lakh three years from now.

You should get an idea of how much your savings will grow at a given rate of interest at the end of three years. Checking the future value of your money using a future value calculator can help you make an informed decision.

You can also compare investments with the help of a future value calculator. If you have a fair idea of what kind of return you can get on a particular asset, then you can use the future value calculator to figure out its future value.

For example, a lot of times asset owners keep getting offers for their assets. If they know the future value and if they can compare it with the price they can get now, then they can make a more informed decision.