Future Value Calculator - Calculate Future Value of Investments Online

Future Value of Investment

Present Value of Investment

Total Periodic Investment

Total Interest

What is Future Value?

It is a value of an asset or investment at a particular date in future. Future value shows you the amount to which a current asset would grow over some time. This Method gives you an idea of how much an investment today is worth in the future. The future value is important to both investors and financial planners. It helps investors make sound financial decisions based on their financial goals.

Understanding the concept of future value helps you to earn a return above inflation. Inflation is the climb in the prices of goods and services over some time. Your investment must beat inflation over the long-term if you want to achieve crucial financial goals, such as buying a House or accumulating a corpus for children’s higher education and marriage.

Future value is significant for a business. If you invest money in a new project, it is essential to know the return on investment. Future value helps you to calculate the potential return from the project.

What is Future Value Calculator?

The future value calculator is a simulation that compute the future value of an investment. It shows you what your money is worth 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 and Formula?

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 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 Using ClearTax Future Value Calculator Online

  • 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.

Frequently Asked Questions

Why does Future Value Calculator ask for the period of compounding of the interest rate?

Compounding is a process where the earnings of the assets are reinvested to earn additional earnings over time. The compounding period is a period when the interest was last compounded and when it will be compounded again.
Interest may be compounded on any frequency schedule from daily to annually. However, when you calculate compound interest, the period of compounding makes a significant difference.
For example, the amount of compound interest that accrues on Rs 10,000 compounded at 8% annually for five years, will be lower as compared to Rs 10,000 compounded quarterly, at the same rate of interest over the same period. The ClearTax Future Value Calculator takes the period of compounding into account when calculating the future value of your investment.

Is the ClearTax Future Value Calculator easy to use?

You may use the ClearTax Future Value Calculator from the comfort of your house and calculate the future value of your investments in seconds.

How does ClearTax Future Value Calculator help your business?

Businesses would consider the time value of money before investing in a project. They need to know the future value of the investment, as compared to today’s present value. The future earnings help the business decide if the current investment in the project has benefits over the long-term.

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