Future Value Calculator
This calculator determines the future value of an investment. Enter a starting amount, periodic contributions, the interest rate, and the time period to see how much your money can grow.
Your Future Value
Enter your investment details above to see its potential growth.
What is Future Value (FV)?
Future Value (FV) is a financial concept that determines the value of a current asset at a specified date in the future, based on an assumed rate of growth. It is a fundamental part of the Time Value of Money principle, which states that money available today is worth more than the identical sum in the future due to its potential earning capacity. Future Value helps you answer questions like, "If I invest this much today, how much will I have for retirement?"
The Power of Compound Interest
The engine that drives future value growth is compound interest. This is the interest earned not only on your initial principal but also on the accumulated interest from previous periods. It's often called "interest on interest." Our calculator shows you the impact of compounding by separating your total interest earned from your principal contributions. You can also adjust the "Compound Frequency" to see how more frequent compounding (e.g., daily vs. annually) can accelerate your investment's growth.
How to Use the Future Value Calculator
- Starting Amount: Enter the initial lump sum you are investing (Present Value). If you're starting from scratch, you can enter 0.
- Periodic Contribution: Enter the additional amount you plan to contribute regularly (e.g., monthly). Enter 0 if you are only investing an initial lump sum.
- Contribution & Compounding Frequency: Select how often you contribute and how often the interest is calculated. More frequent compounding leads to slightly higher returns.
- Annual Interest Rate: Enter the expected annual rate of return on your investment.
- Investment Period: Enter the number of years you plan to let your investment grow.
Practical Applications
Understanding future value is essential for financial planning. You can use this calculator to:
- Project the growth of your retirement savings (401k, IRA).
- Set savings goals for a future purchase, like a house down payment or a child's education.
- Visualize the long-term impact of making regular investments.
- Compare different investment scenarios by changing the rate, duration, or contribution amount.