What is future value?

Future value (FV) is the projected worth of an investment at a specific point in the future, based on an assumed growth rate. It accounts for the initial investment, any periodic contributions, and the effect of compound interest over time.

How do periodic contributions affect future value?

Regular contributions dramatically increase future value due to compound interest. Each contribution earns its own interest, which then earns additional interest in subsequent periods. Even small monthly contributions can grow substantially over long time horizons, making consistent investing one of the most effective wealth-building strategies.

What is the difference between simple and compound interest?

Simple interest is calculated only on the original principal, while compound interest is calculated on the principal plus accumulated interest. Compound interest leads to exponential growth over time, as you earn interest on interest. This calculator uses compound interest, which is how most savings accounts and investments actually work.

How does compounding frequency affect future value?

More frequent compounding (daily vs. annually) results in a higher future value because interest is calculated and added to the principal more often. However, the difference diminishes at higher frequencies. Monthly and daily compounding produce nearly identical results for most practical purposes.

Future Value Calculator

Project how your investment grows over time with compound interest and periodic contributions.

Initial Investment ($)

Monthly Contribution ($)

Annual Interest Rate (%)

Number of Years

Compounding Frequency

Future Value

Total Contributions

Total Interest Earned

How Future Value Works

Future value (FV) measures what an investment made today will be worth at a specific date in the future, assuming a fixed rate of return and regular compounding. It is one of the core concepts in personal finance and investing, helping you set savings goals, plan for retirement, and understand the power of compound interest over time.

The Future Value Formula

For a lump-sum investment, the future value formula is FV = PV × (1 + r/n)^n×t, where PV is the present value or initial investment, r is the annual interest rate, n is the number of compounding periods per year, and t is the number of years. When periodic contributions are included, an additional term accounts for the future value of an annuity.

The Power of Consistent Contributions

Adding regular monthly contributions significantly accelerates wealth accumulation. For example, investing $10,000 at 7% for 20 years grows to about $40,000. But adding just $200 per month to that same investment results in over $140,000. The growth chart above illustrates how contributions and compound interest stack over time, with the interest portion growing exponentially in later years.

Use this calculator to experiment with different scenarios. Adjusting the interest rate, contribution amount, or time horizon shows you exactly how each variable impacts your final balance. Starting early and contributing consistently are the two most powerful levers for building long-term wealth.

Formula

FV = PV × (1 + r/n)^nt + PMT × [((1 + r/n)^nt − 1) / (r/n)]

Where:

FV = future value
PV = present value (initial investment)
PMT = periodic contribution
r = annual interest rate (as a decimal)
n = compounding periods per year
t = number of years

Example Calculation

Scenario: $10,000 initial investment with $200/month contributions at 7% annual return for 20 years, compounded monthly

Step 1: Monthly rate r/n = 0.07/12 = 0.005833, periods nt = 240
Step 2: Lump sum growth = $10,000 × (1.005833)²⁴⁰ = $40,387
Step 3: Contribution growth = $200 × [((1.005833)²⁴⁰ − 1) / 0.005833] = $104,185
Result: Total future value = $144,572 | Total contributed = $58,000 | Interest earned = $86,572

This calculator is for informational purposes only and does not constitute financial, tax, or legal advice. Always consult a qualified professional for decisions specific to your situation.