Future Value Calculator

Future Value Calculator

If you invest your money or put it in a savings account, it’s natural to wonder how much you might make. By adding a few simple details, you can find out the value of your capital at an upcoming date. This calculator can find the future value of securities or retirement accounts. You can include regular deposits and compound interest to get a measure of your returns. Plus, you can read about how future value is calculated and why it's necessary.

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What is future value?
Future value refers to the worth of your money at a later date. It is based on the principle that money can gain value over time. Money can increase in value for different reasons. A series of deposits into a savings plan can provide returns if the account earns interest. Meanwhile, selling your home for more than you bought it for also implies an increase in your money’s value. Thus, future value forms the pillars of finance.
The future value formula allows people to work out what returns an investment can provide at a specific date. As a result, it can work for a multitude of investment mediums. Future value can dictate what returns a corporate or municipal bond might provide by maturity. Alternatively, it can estimate earnings from stock options, mutual funds, REITs, and retirement accounts.
Why is future value significant?
Future value is important for many reasons. The time value of money is essential when it comes to loans and credit cards. When a lender is assessing a loan application, the future value of their money is an important element in the deal. What will they make from lending out their funds to you? If money didn’t have time value, the creditor wouldn’t be able to charge interest on their resources.
Future value also has many standard applications. It can be useful for individuals looking to invest or build up their savings. Part of investing is assessing your risk and reward. Future value gives investors a simple way to determine how a security might perform. When their profit is balanced against their risk, the investor can make an informed decision regarding their capital.
On the topic of savings, future value can assess the strength of a savings strategy. Whether you have a workplace program like 401k or a high-interest savings account, future value will tell you what the account may eventually be worth. The formula requires that all the regular payments stay the same, with the final value incorporating interest for the period in question.
How to calculate future value
Future value (FV) is calculated using a mathematical formula that can vary depending on the circumstance. For instance, computing the final value of a lump-sum investment is different from figuring the worth of regular deposits into a savings account. Further, working out simple interest differs from finding compound interest. Below, you can see three common variances of the future value formula:
Simple interest (when interest is earned on the initial deposit only)
Compound interest (when interest is earned on the cumulative balance)

Series of deposits with compound interest (most savings and retirement accounts)

Example of future value
What would an investor benefit most from; a \$1000 bond from company XYZ that pays 7% (compounded semi-annually) and has a 5-year maturity. Or, 100 ABC stocks at \$15 per share that provide a 5% return (compounded quarterly) for the next 3-years. To figure this out, you can use the formulas provided or the calculator widget.
First, let’s find the value of each investment.
XYZ bond after five years is worth \$1,410.87. Since the initial investment was \$1000, the profit from this transaction is \$410.87.
ABC stock after three years is valued at \$1,741.37. Because the original investment was \$1,500, the gain from this transaction is \$241.37.
While the returns are similar, ABC stock is the better option. It provides less interest than the bond, but it compounds more frequently to drive up the value. The maturity on the stocks gives the investor a chance to reinvest their capital for another two years to make even more profit.
Should the investor decide to hold this security for the same amount of time as the bond, the stock would return slightly more. After five years, the profit from ABC stock would be \$423.32. However, if the investor prefers to have less involvement and more stability, the bond can be the better choice.
Using the calculator
The calculator is very straightforward to use. It just requires some basic information regarding your investment or savings. Let’s review the details together.
Step 1. On the first line of the calculator, please specify your initial deposit or investment. You can use the arrow keys or your keyboard to make this input easier. Step 2. On line two and three, select the date of the initial deposit and when you want to know the future value. To use the calendars, tap the calendar icon. Click on the month and year in the title to expand your date options. Begin by picking a year, followed by the month. Then select ‘OK’. You can then choose the date you want by clicking once. Step 3. If you are making periodic deposits or additional investments on a regular basis, add the amount on line four. Step 4. On line five, please state the rate of return on the account or the security. Step 5. You can specify the frequency of the deposits on line six, followed by the compounding method on line seven. The more often compounding happens, the more you can make on your capital and earnings. Step 6. Finally, if you make your deposits at the beginning of the period, check the box at the end of the questionnaire.