Future Value Calculator
This future value calculator figures the after-tax and after-inflation value of periodic payments at a constant interest rate.
In other words, it calculates what your investment will be worth in real terms - net of inflation and taxes.
This calculator assumes monthly compounding so if you want a different time interval try this compound interest calculator. If you want to adjust a single lump-sum without compounding try this inflation calculator. Other helpful and related calculators include present value calculator and present value of an annuity calculator.
One of these calculators is certain to fit your exact needs!
Future Value Of Your Money
If you plan to do some investments, it is important that you understand the time value of your money. The time value of money simply illustrates that the value of your money today is higher than the value of your money in the future. Future value is simply knowing the value of the money you that you will get in the future if you invest your money today. To get a better view of how much you will get in the future with your current investments, calculate the future value of your savings using the above future value calculator.
Present Value VS. Future Value
The present value of money is simply the value of the money today. If you have $1,000 in the bank today, the present value of your money is $1,000. Suppose you keep that $1,000 in your wallet, if we calculate the present value of your $1,000 after 5 years, the result will always be lesser compared to the value today because of inflation.
The future value is simply the value of your money in the future after factoring interest and inflation rates. Suppose you deposit your $1,000 in the bank and it earns an interest, if you multiply your $1,000 with the interest rate and the number of years of your deposit, you will get the future value of your investment. This is the old method of calculating the future value. To get a more realistic value of your future investment, you need to factor the inflation rate as well as the government taxes. The interest and inflation rates are the two variables that has a big impact in the future value of your money.
Future Value Calculation
The time value of money calculation is used essentially in all areas of finance. Future value is used for calculating the amount of money you will be receiving in the future. The future value formula is:
Future Value = Present Value x (1 + Rate of Return)^Number of Years
To get a more realistic result of the future value of your investments, you need to also factor the tax rate and inflation rate in your calculation. It is important that you take into account inflation since it will greatly affect the buying power of your money in the future. It is really impossible to predict the inflation rate in the future. Nevertheless, we still need to include the inflation rate in our calculation. By factoring the inflation rate, you can be assured that you will have enough money to meet your future goals. The future value calculator above will help you determine the future value of your money after inflation takes away at it’s value.
The Importance Of Future Value
Future value is important when making investments. Understanding the future value will prepare you for the possible effects of inflation, interest rates, or taxes in your future investments. As we all know that inflation will reduce the buying power of your money and interest rates will always increase it. These two factors will determine if the future value of your investment will either increase or decrease. It is important that you understand the effects of inflation and interest rates in the future value of your investments so that you can make an informed decision about how to generate the maximum value in the future. The future value can guide you in choosing the right investments that will meet your goals.
Future Value Calculator Terms And Definitions
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