Future Value Calculator

Future value: the core question in financial planning

If I put X aside today, or Y per month, at some expected return, what will it be worth by date Z? That's the future-value question, and it sits underneath most long-horizon decisions: retirement contribution rates, savings goals, comparing investment products, and deciding whether to overpay a mortgage or invest. The formula is straightforward; the judgment is in the assumptions.

The two formulas, separated cleanly

Future value of a lump sumFV = PV × (1 + r)ⁿ. You put in 10,000 today, leave it for 20 years at 6%, and end up with 32,071. Future value of a series of regular contributions (an annuity)FV = PMT × [((1 + i)ⁿ − 1) / i], where i is the rate per period and n the number of periods. Contributing 300 a month for 20 years at 6% a year means i = 0.5% and n = 240, which comes to 138,612. This tool handles both, and they answer different questions: a lump-sum answer does not include ongoing saving; an annuity answer assumes no starting pot.

Real returns and nominal returns

A frequent source of error in future-value calculations is using a nominal return (say 8% equity historical) without adjusting for inflation. Nominal FV of 10,000 at 8% for 30 years = 100,627. Subtracting inflation from the nominal rate (8% minus 2.5%) gives 5.5% and a real figure of 49,840. The exact conversion divides rather than subtracts: (1.08 / 1.025) − 1 = 5.366% real, which gives 47,973. When the return runs above inflation the subtraction shortcut overstates the real figure; below inflation it understates, and the two agree only when the rates are equal. The error term is (n − i) × i / (1 + i), which is nil when either the gap or inflation is zero, largest partway between, and reversed once inflation passes the return. Over long horizons the two conventions diverge materially, so the result only carries meaning once the rate is known to be nominal or real. The future-value number means nothing if the purchasing power it represents isn't stated.

Which return rate the projection assumes

Long-run real equity returns have been reported at around 5% annualised over 1900–2024 (UBS Global Investment Returns Yearbook, building on Dimson, Marsh and Staunton). Bond and mixed-portfolio real returns have historically sat below equities over the same period, and cash close to inflation, though each depends heavily on the window and the market measured. A rate at the top of the historical range produces a projection that assumes an uninterrupted best case, and one well below it produces the opposite. The rate is the input carrying the most uncertainty, since the horizon and the contribution are chosen while the return is not.

How compounding multiplies small differences

A 1-percentage-point difference in annual return does not sound like much, but over 30 years on a lump sum it projects to about a third more final wealth: 10,000 at 4% reaches 32,434 against 43,219 at 5%, 33% larger. The effect is horizon-dependent, worth about 20% over 20 years rather than 33%, and regular contributions dilute it because money paid in later compounds for less time. At this page's defaults, moving 7% to 8% raises the projection by roughly a fifth. Ranked by an equal proportional change to each input, the horizon moves the result most in every mix of starting pot and contribution: on a starting pot of 8,000 with 350 a month, a 1% longer horizon lifts the projection by about 2.1% against 1.2% for the rate, and the two converge as the starting pot comes to dominate the contribution stream. The panel cannot reproduce that comparison directly, because its controls step in whole years and half-points, so the two inputs cannot be moved by comparable amounts and which one appears to move the result more depends on the same mix. Small factors that persistently move the effective return, such as fees, tax drag and asset allocation, matter substantially over long horizons. Halving a 30-year projection would take roughly 2.4 percentage points of persistent drag on a lump sum, so how much they subtract depends entirely on how large those costs actually are.

The opposite direction: present value

The same formula inverted gives you present value: what's a future sum worth today? If someone offers you 50,000 in 10 years instead of money now, what's the equivalent today at a 5% discount rate? 50,000 ÷ 1.05¹⁰ = 30,696. This illustrates the core idea behind discounted cash flow valuation, and behind any decision between a sum now and a larger sum later. The present-value direction answers the mirror question, and the same rate and horizon drive both.

Using future value for goal-setting

A common approach is working backwards from a goal. You want 400,000 in 20 years at 6% real. Required monthly contribution: 865.72. In 25 years instead: 577.21 a month. Five extra years of compounding reduces the monthly amount by a third. That sensitivity is why the time horizon moves the required contribution more than any other input. The calculator lets you test this by changing the years input while holding other variables constant.

Monthly vs annual contribution

Technically, paying contributions monthly vs annually affects the calculation slightly, since a month of early contribution receives one month of extra compounding. Over 30 years at 7%, twelve monthly payments of 500 finish about 7.6% ahead of a single 6,000 payment made at each year end, and about 0.6% ahead of the same payment made at each year start. The size of the gap depends on the rate and on which annual convention is being compared.

What this calculator does not capture

Real returns are volatile, not smooth. Taxes on gains outside tax-advantaged accounts reduce the effective return. Fees compound against the balance. Personal circumstances change, and job loss, illness or a change in household can interrupt contribution patterns. Sequence-of-returns risk is material near withdrawal. The future-value figure is a central estimate rather than a floor, and running the same inputs at a lower rate shows how much of the projection rests on the return assumption.