Future Value Calculator: Calculate Investment

A Future Value Calculator will help you to calculate the value your investment or savings account may be worth. Simply enter the initial amount you’re investing, the interest rate, investment time and how frequently it is compounded.

Understanding future value is an important part of personal finance. Being aware of how much your money is worth can help you to plan your retirement, save for a deposit, create an emergency fund and know how much you may need to save for future educational costs.

If you were to invest $10,000 into an account with 6% interest rate per annum, over ten years your balance would increase significantly due to it being compounded.

Our Future Value Calculator will help you to determine how much your investment or savings may increase. Please note these figures are an estimation.

How to Use the Future Value Calculator

To calculate the future value you’ll need to complete the following:

Initial investment. Enter how much you’re investing right now. E.g. $10,000.

Annual interest rate. Enter the interest rate you expect to earn. E.g. 6%.

Compounded how often. Choose how frequently your interest will be compounded. E.g. Annually, biannually, quarterly, monthly or daily.

Investment term. Enter how many years you’ll be investing.

Click calculate.

You can now see how much your initial investment may increase. You can also make changes to the interest rate, investment term and how frequently it is compounded to compare different options.

To get the most accurate information possible use a realistic interest rate and take any account fees into consideration.

Future Value Calculation

This calculation will give you an indication of how much your investment will be worth in the future.

Future Value Calculation (Compound Interest)

FV = PV x (1 + r/n) ^ (n x t)

Where:

FV = Future Value

PV = Present Value

r = Annual interest rate (as a decimal)

n = Number of compounds per year

t = Investment term in years

If your interest is compounded annually the equation will be:

FV = PV x (1 + r) ^ t

For example 6% interest rate would be entered as 0.06. If you’re compounding monthly then n is 12.

This calculation assumes you have a fixed interest rate and no extra deposits or withdrawals. If you’re adding regular deposits then you’ll need to use a future value calculation that takes this into consideration.

Example

If you were to invest $10,000 into a savings/investment account with 6% interest rate per annum compounded monthly over 10 years.

Initial investment = $10,000.

Interest rate = 6%.

Compounded = Monthly.

Investment term = 10 years.

Using the future value calculation:

FV = $10,000 x (1 + 0.06/12) ^ (12 x 10)

FV = $10,000 x (1.005) ^ 120

FV = ~ $18,193.97.

Your calculations will show:

Investment

Amount

Initial Investment

$10,000.00

Total Growth

$8,193.97

Future Value

$18,193.97

Investment Term

10 Years

Total Growth (%)

81.94%

You’ve got an initial investment of $10,000 grows to approximately $18,194 after 10 years. This assumes your interest rate stays the same and the interest is compounded monthly.

The difference between your future value and initial investment will show you how much your investment has grown. This will not take any taxes or fees into consideration. Depending on the product you’re using results can vary.

Understanding Your Calculation

A Future Value Calculator will generally give you an indication of how much your investment will be worth and how much it will grow.

Future value. This will give you an indication of how much your investment may be worth after the investment term. This includes your original investment plus interest/growth.

Total growth. This shows you the difference between your future value and original investment. For a basic compound interest calculation this will be interest earned. For other types of investments this will show you how much the investment has increased/decreased.

Growth (%). This will show you how much the investment has increased. This can be useful for comparing different scenarios. Please note how long you’ve been investing for.

Generally speaking the higher the initial investment, assumed rate of return and/or investment term will result in a higher future value. It will not take inflation into consideration unless specified.

For example $20,000 received in 20 years will not necessarily have the same purchasing power as $20,000.

Things That Can Influence Your Calculation

There are a few factors that can affect how much your money will be worth in the future.

Initial investment. A higher initial investment will result in a higher future value.

Interest rate/return. Assuming you’ve got a higher interest rate this will increase the future value. However your investment may not always give you the returns you expect.

Investment term. The longer you invest for the more time you’ll have for interest/return to be earned. Compounding can have a large effect over a few decades.

Compounded. The more frequently your interest is compounded the slightly higher your future value will be. This assumes your interest rate is positive and remains the same.

Regular deposits. Adding regular deposits can significantly increase your future value. However if you’re using a basic calculator with just your initial investment this will not be included.

Taxes & Fees. Taxes (Federal & State), account fees and investment costs can reduce how much you’ll actually have.

Inflation. Inflation will reduce your buying power. Your future value may be higher but this won’t be worth as much in today’s money.

Returns. Savings accounts may have fluctuating interest rates. Other investments may also increase/decrease. Your future value may not be the same as your fixed rate.

Advantages & Practical Uses of a Future Value Calculator

A Future Value Calculator can be useful for understanding your personal finances and how much you may save for the long term.

Investment for retirement. See how much your savings may grow before retirement. Including eligible 401(k)s and IRAs.

Saving for college. See how much your money may grow for future educational costs.

Saving for a deposit. See how much you may save towards buying a home.

Emergency fund. See how much your interest may contribute to your emergency fund.

Compare investments. Compare how much your investment may grow depending on the assumed rate of return and investment term.

Business finances. See how much your retained cash or money set aside may be worth.

Long term goal. See if your current saving strategy may help you achieve a financial goal.

Using the calculator you can compare how much $10,000 may grow over 5, 10 and 20 years. This can help to show how important time is when planning your finances.

It can help you to see how much you may earn depending on your scenario. Please note these figures are based on your assumptions.

Accuracy, Assumptions & Limitations

A Future Value Calculator will produce accurate results based on the correct formula and inputs. However these figures are not guaranteed.

The standard compound interest calculation assumes you have a fixed interest rate, initial investment, compounding and no extra deposits/withdrawals.

Depending on the product you’re using the interest may be added differently. The interest rate may also vary. Investment returns may also vary, especially with stocks, bonds, mutual funds and ETFs.

A basic calculation will generally not take taxes, account fees, transaction fees, inflation or regular deposits into consideration. This can have a big impact on your final amount.

Depending on what account you’re using in the US there may be different tax implications. Tax advantaged accounts (Certain IRAs & 401(k)s) may be treated differently.

Using realistic returns, checking your product terms and taking inflation and taxes into consideration will give you the most accurate estimate. Please treat this as a planning tool.

Frequently Asked Questions (FAQs)

What is future value?

Future value is an indication of how much your investment/savings balance may be worth at a certain point in the future. This can help you understand how much your money may grow.

How do you calculate future value?

For compound interest use the formula: FV = PV x (1 + r/n) ^ (n x t). Where PV is your initial investment, r is your annual interest rate (as a decimal), n is the number of compounds per year and t is your investment term in years.

What is the difference between future value and present value?

Present value is an indication of how much a future value is worth today. Future value is an indication of how much your current value may be worth in the future.

Does compounding affect future value?

Yes. If you have the same nominal interest rate the more frequently it is compounded the slightly higher your future value will be. This depends on your interest rate and investment term.

Can I calculate future value if I’m making monthly deposits?

Yes. However you’ll need to use a calculator that allows for regular deposits. You’ll need to take into consideration how much you’re depositing and how long it will be earning interest. This can vary depending on if you’re adding your deposits at the start or end of each month.

How does inflation affect future value?

Inflation will reduce your buying power. Even though your account may increase the amount of goods/services you can purchase may reduce. You can calculate this by taking inflation into consideration.

Is future value guaranteed?

No. Future value is an indication based on certain assumptions. Some savings products may have a guaranteed interest rate. However market linked investments can vary and lose value. Please take a look at the risks, fees and terms of the product.