Future Value Calculator

What is a Future Value Calculator?

A future value calculator is a financial tool that estimates the value of an investment or cash flow on a future date based on a specific interest rate and time.

It helps investors and financial planners calculate the future value of an amount invested today for a set time duration and compounded annually at a specific growth rate.

How Can a Future Value Calculator Help You?

A future value calculator can be useful for anyone wanting to grow their savings. Here is how it can benefit you: 

1. Investment Planning: It enables you to project the future value of your current investment and helps compare investment options based on returns and time duration.

2. Retirement Savings: It helps calculate the growth of your savings over time and allows you to identify how much you need to invest today to reach your retirement goals later in life.

3. Goal-based Financial Planning: It is considered ideal for establishing financial objectives such as buying a home, financing education or starting a business. The future value calculator shows how much you need to save regularly to reach a desired future amount. 

Formula to Calculate Future Value

The formula to Calculate Future Value is as follows: 

FV = P (1 + r)^t

where, P = Total Investment 

r = Expected annual rate of return (growth rate) 

t = Time Period in years 

Example

Suppose you invested INR 1,000 at a 5% annual rate of return, compounded annually for 3 years. Then, the calculation of FV will be as follows;

FV = ₹ 1,000 (1 + 0.05)^3

     = ₹ 1,158

So, after 3 years, the investment grows to INR ₹ 1,158 and gives you a profit of ₹ 158. 

How Does a Future Value Calculator Work?

Step 1 – Input Values: The user inputs key values such as the Total investment Amount, Expected annual rate of return and time period. 

Step 2 – Application of Formula: Pocketful’s Future Value Calculator uses the formula mentioned above to calculate the future value of investments based on the inputs provided in the first step.

Step 3 – Results: The Pocketful’s calculator quickly calculates the Estimated Returns and Maturity Value, showing the possible growth of your investment over time. 

How to Use a Pocketful Future Value Calculator?

Pocketful’s Future Value Calculator is a user-friendly tool designed to help you estimate the future value of an investment. 

Follow these steps to use it effectively: 

1. Input Amount: Enter your investment amount in the given blank space, for instance, ₹ 25,000. 

2. Set the Growth Rate: Modify the growth rate with the help of a slider to align with your expected annual return (compounded annually), for instance, 2.5% per annum. 

3. Select the Investment Duration: Use the time slider to select the duration for which you want to invest, for instance, 5 years. 

4. View the Estimated Returns: See how much profit you will get over time. Based on the inputs provided above in steps 1-3, you earn ₹ 3,285 after 5 years.

5. Check the Maturity Value: The calculator instantly shows the estimated future value of your investment. The maturity value is ₹ 28,285 for the inputs mentioned in steps 1-3.

6. Make an Investment Decision: Compare different investment options and make an informed investment decision.

Benefits of Using the Future Value Calculator

1. Easy Financial Planning: The future value calculator helps in setting realistic financial goals for savings, retirement or big purchases and helps in planning major life expenses. 

2. Saves Time & Effort: It removes the need for complex manual calculations and quickly calculates the results with just a few clicks and inputs. 

3. Helps With Compound Interest Growth: 

• With the help of a future calculator, we can see how your initial investment compounds and reinvesting profits can greatly increase wealth.
• The results generated show the power of investing, which can help promote long-term investment.

4. Ideal for Investors: Investors can use it to evaluate the long-term returns of stocks, bonds, and other investments. 

Get ready to take charge of your future and make some practical investment decisions with Pocketful!