How to calculate Future Value?
To compute future value, you require an initial investment amount, time horizon, and rate of return. Let’s say you invested ₹ 1,00,000 in a bank’s FD for 10 years at 5 % p.a. In that case, your future value will be
Future Value = Present Value * (1 + Rate of Return)^Time
= ₹ 1,00,000 * (1 + 5 %) ^ 10
= ₹ 1,62,889.47
Present Value = ₹ 1,00,000
Rate of Return = 5 %
Time Horizon = 10 Yrs
So, the future value of the investment will be ₹ 1,62,889.47 after 10 years.
Benefits
- The Future Value Calculator displays the amount that is collected in the future if you invest a specific amount at a certain time.
- It helps you in opting for an investment that provides returns higher than inflation over the long-term.
- You can gauge whether to increase the deposit amount and frequency of depositing the investment. You can go for the investment that delivers to you the highest returns on investment.