What is the Future Value Calculator?

The future value calculator is a simulation that calculates the future value of an investment. It shows you what your money is worth in the future. A future value calculator is a smart tool that computes the value of any investment at a specific time in the future.

The future value calculator consists of a formula box, where you enter the initial investment, periodic investment, rate of interest, and the number of periods. The calculator will display the future value of your investment.

How does Future Value Calculators work?

The future value calculator calculates the future value (FV) of an investment for a series of regular deposits, on a set rate of interest (r), and the number of years (t).

You must use the mathematical formula:

A = PMT ((1+r/n)^nt – 1) / (r/n))

(The formula assumes the deposits are made at the end of each period such as month or year).

A = Future Value of the Investment
PMT = Payment amount for each period
n = Number of compounds per period
t = Number of periods the money is invested

For example, you deposit Rs 10,000 per month (The deposit is made at the end of each month) at an interest rate of 8% compounded monthly. (This is 12 compounds per period). You may calculate the value of the investment after 10 years as follows:

PMT = Rs 10,000
n = 12 (Number of compounds per period is 12 for monthly compounding)
t = 10 years

A = (10,000(((1+0.08/12)^(120) – 1) / (0.08/12)))
A = Rs 18,29,460.

You have the mathematical formula if deposits are made at the beginning of each period:

A = PMT (((1 + r/n)^(nt) – 1) / (r/n)) * (1+r/n)

Let’s do the calculation with the same figures as above.

A = 10,000 (((1+0.08/12)^120 -1) / (0.08/12) * (1+0.08/12)

A = 18,17,345

How to use the ClearTax Future Value Calculators?

The ClearTax Future Value Calculator shows you the future value of your investments in seconds. To use the ClearTax Future Value Calculator:

• You must enter the monthly investment.
• Enter the annual interest.
• You then select the compounding as monthly, quarterly, half-yearly, or yearly.
• Enter 0 as the Present Value.
• Select the number of years for the investment.
• You then select PMT as the beginning or end of each compound period.
• The ClearTax Future Value Calculator displays the future value of the investment.

Benefits of ClearTax Future Value Calculator

• The ClearTax Future Value Calculator shows you how much amount is accumulated in the future if you invest a certain amount at a particular time.
• You can choose an investment that offers a return above inflation over the long-term.
• The calculator helps you decide if you must increase the deposit amount, the number the times you deposit the investment and also choose the investment option where you get the best return on investment.