You can use our future value calculator tool to estimate how much a series of savings or investments can build up to over given time. Continue scrolling for instructions on how to use our calculator, and an overview of the formula and tips you need to calculate it yourself.
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It's with our financial calculators here, we've designed our future value calculator with ease of use and flexibility in mind. Let's walk through how it works.
How to use our future value calculator
Our calculator uses the following easy-to-understand fields to complete:
- Present value: the current value of your investment.
- Interest rate: the rate of interest you're earning, and whether it is daily, monthly or annual (flat rate or compounding).
- Compound frequency: how often interest is compounded (linked to monthly).
- Time period: the length of investment in years and months.
- Periodic contributions: any regular deposits or withdrawals you want to include (either at beginning or end of the period).
Should you wish, you can include monthly deposits and withdrawals within your calculations, and you can see the results of those deposits in the year-by-year breakdown.
How to calculate the future value of an investment
Our calculator uses a variation of the future value of a series formula, beginning with the time value of money formula, to work out future investment values based on periodic contributions. Let's take a closer look at the formula.
Future value of a series formula
We've listed two variations of the formula for you to use, depending on when you make your deposits.
For deposits made at the END of each period (ordinary annuity):
For deposits made at the BEGINNING of each period (annuity due):
Where:
· A = Future value of the investment (including interest)
· PMT = the payment amount made each period
· r = the annual interest rate (as decimal)
· n = the number of compounding periods per year (e.g. 12 for monthly)
· t = the number of years the money is invested for
These formulas assume that each payment to be equal in amount and that interest is compounded regularly through the duration. The ordinary annuity version does not pay any interest on the first period; annuity due payments do, because it is the start of each period.
Let's walk through a couple of examples, so you can see the formula in action.
Future value formula example 1
Lily makes deposits of $100 per month for the first investment of, at the end of every month. She receives a set annual interest rate of 5% and her interest is compounded once per day for 10 consecutive years. We enter the value of this investment after 10 years to see her calculation as follows:
PMT = 100, r = 5/100 = 0.05 (decimal), n = 12, t = 10
Inserting these figures into our formula (case 1), we get:
Total = PMT × ((1 + r/n)nt − 1) / (r/n)
Total = 100 × ((1 + 0.05/12)12×10 − 1) / (0.05/12)
Total = 100 × ((1.004167)120 − 1) / 0.004167
Total = 100 × (1.647009 − 1) / 0.004167
Total = 100 × 155.2823
Total = $15,528.23
...after 10 years, Lily's investment fully at an end is $15,528.23.
Future value formula example 2
Tim deposits a regular $1,000 per year (deposit at the end of each year) into a savings account that gives him an interest rate of 6%, compounded annually. The value of his investment after 5 years can be calculated as follows:
PMT = $1000, r = 6/100 = 0.06 (percent), n = 1, t = 5
Total = PMT × ((1 + r/n)nt − 1) / (r/n)
Total = 1000 × ((1 + 0.06/1)1×5 − 1) / (0.06/1)
Total = 1000 × (1.3382256 − 1) / 0.06
Total = 1000 × 5.637093
Total = $5,637.09
Tim's investment therefore after 5 years equates to $5,637.09, so a total of $5,000 in contributions and $637.09 in interest. If you want to have a go yourself with these figures yourself, try our Compound Interest Calculator.
Seeking professional advice
Let's not just run the numbers. Everyone's financial situation is different. So, a great method of staying fulfilled with our advice is to point directly out of the starting: actual data of its future value of your investment. It only gives a demonstration of what might be possible, not absolute values.
We recommend that you speak to a qualified financial advisor if you're making actually long-term planning.
Seeking with an independent financial advisor: allows you to discuss and manage strategies that fit your personal circumstances and aspirations. If they're good, they'll suggest regular reviews, so you work hand-in-hand to adapt and adjust to wherever life takes you going forward.
If you're looking to find a trusted advisor, it's worth checking in the Financial Planning Association (U.S.) or Unbiased (U.K.).
Please note: The information on this page is intended for general guidance only and does not constitute financial advice.
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