Future Value Calculator
Future value refers to the value of money at a future date.
Future value in Detail
Suppose you won a lottery of £10,000, and you were given two options to take that money. Option 1 is to take the money today, and option 2 is to collect the money after 5 years. Not surprisingly, you will choose to collect the money today. If you collect the money today, you can invest it and earn interest on it, and you will get a higher amount after 5 years.
Example 1: At an annual interest rate of 5%, the future value of £10,000 after 5 years will be £12,782.82. Whereas if you choose to take the money after 5 years, the future value of the amount will be £10,000 after 5 years, because the money has not grown.
Future value is an important concept in the world of investments. Anybody who is making regular investments in a particular instrument would like to know the value of the investment after a specific period.
Example 2: You are investing £5,000 in bonds every year for the next 10 years. Additionally, you are investing £500 every year for 10 years. Assuming an interest rate of 4%, the future value of your investment after 10 years will be £13,404.27.
Future value is also useful for those who want to make a purchase or an investment at a future date.
Example 3: You want to buy a property in London after 5 years. Taking the current property prices and assume a standard rate of increase (based on historic growth), you can calculate the approximate future value of the property after 5 years. This way you can plan your savings in such a way that you have the target amount after 5 years.
In 2015, the average price of a house in London is £451,194. Assuming property prices are expected to grow at 6%, the future value of this house after 5 years is £603,800. In order to buy this home, you need to have adequate savings to match the price after 5 years and not the present price. You will require at least 5% of the property amount as deposit before you apply for a mortgage. So, you need to have savings of at least £30,190 for the deposit.
Calculation of future value
We look at the values that are essential for calculating future value.
Present value: This is the value of money at the present time. In example 1, the present value is £10,000. In example 3, the present value is £451,194.
Annual interest rate: This metric can influence the future value in a big way. A higher annual interest rate will mean a higher future value.
Payment amount: This amount is relevant when you are making payments at regular intervals, and you want to know the value of these payments at a future date. Like in example 2, you are making payments of £500 every year, so this will be the payment amount.
Number of payments (years/months): The future value is influenced by the number of payments made and their frequency. The higher the number of payments, the greater will be the future value.
Payment frequency: This refers to the frequency of payments, which can be monthly, quarterly, 6 monthly or yearly. A higher payment frequency will result in a higher future value.
Future value is a very important concept in the world of business and finance. To calculate the future value, you can try out our future value calculator.
Popular Finance Calculators
People who read 'Future Value Calculator | Finance Calculators by iCalculator' also viewed the following finance guides and finance calculators:
Finance and Tax Calculators
- Debt Payoff Calculator
- Credit Card Calculator: Fixed V's Minimum Payment
- Credit Card Repayment Calculator
- Payday Loan Calculator
- Loan Calculator
- Early Repayment Loan Calculator
- Car Loan Calculator
- PCP Car Loan Calculator
- Logbook Loan Calculator
- Personal Loan Calculator
- How much can I borrow?
- Mortgage Calculator
- Early Repayment Calculator
- Mortgage Comparison Calculator
- Mortgage Discount Points Calculator
- Stamp Duty Tax Calculator
- Rental Property Calculator
- Balloon Mortgage Calculator
- Buy to Let Mortgage Calculator
- Buy to Let Mortgage Investment Profit Calculator
- Household Electrical Consumption Calculator
- Savings and Debt Comparison Calculator
- Household Budget Calculator
- Present Value Calculator
- Future Value Calculator
- Payments / Repayments Calculator
- Rule of 72 Calculator
- Savings Calculator (Goal Amount)
- US Treasury Bill Calculator [ T-Bill Calculator ]
- Invoice Calculator
- CAGR Calculator
- Perpetuity Calculator
- Effective Annual Rate Calculator
- Margin Calculator
- Current Ratio Calculator
- Dividends Calculator 2018/19
- Corporation Tax Calculator 2018/19
- Capital Gains Tax Calculator 2018/19
- UK Salary Calculators (PAYE Calculators)
- Landlord Income Tax (UK Only)
- US Salary Calculators (Federal Tax Calculators)
- AU Salary Calculators (Income Tax Calculators)
- JM Salary Calculators (Income Tax Calculators)
- CA Salary Calculators (Federal & Province)
- UK Employer NIC Calculator 2018 / 2019 tax year
- IR35 Status Calculator: In or Out?
- IR35 Calculators
- PAYE Calculator: Outside IR35, VAT Registered
- PAYE Calculator: Outside IR35, Non VAT Registered
- PAYE Calculator: Inside IR35, VAT Registered
- PAYE Calculator: Inside IR35, Non VAT Registered
- Employer NICS Calculator
- VAT Calculator
- Contractor Business Loan Calculator
- Profit Calculator
- Small Business Rate Relief Calculator
- VAT Calculator
- Stamp Duty Tax Calculator
- UK Salary Calculator
- United States Salary Calculator
- Canada Salary Calculator
- India Salary Calculator
- Australia Salary Calculator
- Jamaica Salary Calculator
- Singapore Salary Calculator
- Exchange Rate Calculator
- Forex Margin Calculator
- Retirement Calculator - Traditional IRA calculator
- Retirement Calculator - ROTH IRA calculator
- Retirement Comparison Calculator - ROTH and IRA
- Depreciation Comparison Calculator
- Annuity Depreciation Calculator
- Straight Line Depreciation Calculator
- Percentage (Declining Balance) Depreciation Calculator
- Forex Exchange Rate
- Forex Currency Pair
- Forex Leverage
- Forex Market
- Forex Trading
- Forex Margin Call
- Forex Margin Ratio
- Forex Margin Used
- Forex Maintenance Margin
- Forex: Price Interest Points (PIPs)
Self Assessment 2018/19
Don't leave your 2018/19 Self Assessment to the last minute this year, update your information on the go and save time and stress, you will probably save yourself a few pounds too. Grab a free trial now and make tax less taxing.