Future Value Calculator chart

Future Value Calculator

You can use this future value calculator to find the future value of a lump sum or stream of regular savings.

For example, if you invest a certain number of dollars today, once, and let it earn interest for a predetermined number of periods, what is it worth in the future?

Or, if you regularly invest a certain amount what will it be worth in the future? This is a more realistic way of looking at savings since most people save as part of their regular monthly budget through a 401k, 403b, or IRA.

You can use this future value calculator to give you a general idea of what your retirement savings will be worth, but remember that reality is much less uniform than what a calculator will project. Use this only as a starting point for more detailed planning.

Future Value Calculator

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Future Value Calculator Instructions

Future Value of a Lump Sum

To find the future value of a present lump sum, simply put that amount in the present value field.

Leave the Payment (PMT) field empty, or 0.

Set the number of periods to equal the number of compounding periods your interest or return will accrue. For example, if your lump sum will grow for ten years at an annual rate, type 10. If it will grow for 10 years at with monthly compounding, type 120 since there are 120 months in a 10 year period.

Future Value of an Annuity

In academic time value of money language, an annuity is a stream of cash flows. In other words, use this option if you plan to invest or save a certain amount on a regular interval.

Place a 0 in the Present Value (PV) field, and type the amount of your regular savings in the Payment (PMT) field. For example, if you are saving $500 per month, type $500.

Set the number of periods to the number of times you’ll make the contribution. For example, if you’ll make a monthly contribution for 5 years, put 60.

Lump Sum and Stream of Payments

You can combine the two as well. For example, if you already have an amount saved but will also make regular savings contributions going forward.

Simply type the amount you already have saved into the present value field, and the amount of your regular contributions going forward into the payment field.

Interest

The period interest rate (I) is the amount of interest that will accrue each period.

It’s important to consider how many periods you have. Going back to the previous example of monthly contributions for five years… you have monthly periods. You need to convert your interest rate to reflect that.

That’s simple to do. Simply divide your annual rate by 12 to get the amount of monthly interest. If you have a 10% annual rate, then you have a 10%/12 = .833% monthly rate.

Don’t forget about inflation. If you are saving over a long period of time then inflation will significantly impact the true value of your savings.

Why is the Future Value Negative?

For our purposes here, you can simply ignore the negative sign. The value you see is the amount of your future savings.

There are many ways to apply the time value of money math behind what we are doing here. That negative sign becomes very relevant in more complex applications, but since you aren’t trying to earn college credits I’ll skip that discussion for now.