Frequently asked questions
What is the future value formula?
For a lump sum: FV = PV × (1 + r/n)^(n×t), where PV is present value, r is annual rate, n is compounding frequency, and t is years. With periodic additions, the annuity formula adds PMT × [((1+r/n)^(n×t) - 1) / (r/n)]. This calculator handles both automatically.
How is this different from a compound interest calculator?
They're closely related. A future value calculator emphasizes the present-to-future projection with a focus on what you'll have. A compound interest calculator often focuses on the interest earned. The formulas are identical; the framing differs. This tool adds periodic addition frequency as a first-class option.
What rate should I use for projections?
For savings accounts: 4–5% (current high-yield rates). For bond portfolios: 4–6%. For stock index funds: 7–10% historically (use 7% for conservative planning). For real estate: 3–5% appreciation. Always use a rate appropriate for your actual investment vehicle, and consider using a conservative estimate.
Does this account for inflation?
No. The result is in nominal terms (future dollars/currency). To estimate real purchasing power, subtract the expected inflation rate (2–3%) from your return rate. So 7% nominal growth with 3% inflation gives roughly 4% real growth. Over 20+ years, inflation makes a substantial difference.
Should periodic additions be at the start or end of the period?
This calculator applies additions at the start of each period (annuity due). This means each addition gets one extra period of interest compared to end-of-period timing. The difference is typically small (one period's interest on one addition) but adds up over many years with frequent contributions.
How much difference does compounding frequency make?
For a $25,000 lump sum at 7% for 15 years: annual compounding gives $68,977; monthly gives $71,329; daily gives $71,459. The jump from annual to monthly is meaningful (3.4% more); from monthly to daily is negligible. Match the frequency to your actual account for accuracy.