# Accurate Future Value Calculator

Future value of money as of any date.

The value of money will change over time. Meaning, what a dollar will buy today is not what a dollar will buy in the future. What the dollar buys in the future is called its future value. A future value calculator is the tool one uses to calculate a dollar's future value.

Two factors impact the dollar's FV (or any currency's FV):

• inflation (or deflation)
• investment return

The greater the rate of inflation the less the dollar will buy. The greater the investment's rate-of-return (or interest rate) or the greater the rate of deflation, the more the dollar will buy.

This future value calculator will calculate the FV of an amount or asset after an exact number of days assuming any rate-of-return (tested to 99% per annum) for 12 compounding frequencies plus simple interest.

Because this calculator is date sensitive, and because it supports many compounding options, it is a suitable tool for calculating the balance of a debt when the debtor has not made any payments. More details below the calculator

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\$ : mm/dd/yyyy

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The future value calculator normally calculates a nominal future value. This means the calculated future value is the result of an investment gain or from interest earned on the money. A nominal future value does not account for inflation.

If you want to know the real future value, you can do one of two things.

If you want to to know the purchasing power of the original amount after inflation, then deduct an estimated inflation rate from the Annual Interest Rate. Example: If your Annual Interest Rate is 4.5%, and you estimate that inflation will average 2% per year, then rather than enter 4% for your rate-of-return, enter 2.5% instead. The calculated FV will now be the real future value.

This is a bit of an oxymoron more though. Economists call this the real future value, but it's actually an estimated real future value because we can only estimate the future rate of inflation.

Nonetheless, the real future value is closer to an accurate calculation than the nominal future value which as you can see, doesn't even consider inflation.

If on the other hand, you want to be compensated for inflation, then you add the inflation rate to the annual interest rate. If for example, someone had owed you \$2,000 for five and a half years and they agreed to compensate you for 2% inflation on top of a 4% interest rate, then you would add the inflation rate to the rate of return.

The result thus includes the effect of inflation. Or you can think of the calculation this way. If I want to make a real 4.5% gain on my investment, how much will I need to also compensate for the loss of value due to inflation?

## 18 Comments on “Future Value Calculator”

Join the conversation. Tell me what you think.
• ##### Greg Mettamsays:

Are you able to provide a version of the future value calculator in which the interest rate can be set to monthly as well as yearly?

• ##### Karlsays:

Of course, nearly anything can done. Do you mean you want to enter a monthly interest rate? And what do you mean by "provide?" Do you want a custom version to install on your own website? Or do you want me to host a calculator with such a feature? If the latter, I would be able to add the feature to this calculator, but I would need to have a good use case for doing so. Mostly, I would think users could convert a monthly rate to an annual rate.

• ##### Gregsays:

As a lawyer I do a lot of debt recovery work but I sometimes struggle to find a suitable calculator.  If you can host a debt recovery calculator with a full suite of options, that would be very helpful. However, if you don’t want to do that, I am open to the idea of a bespoke calculator for my use only.

• ##### Gregsays:

Karl, I need to calculate the interest due on a specific debt so that I can claim that interest in court proceedings. A debt reduction calculator cannot do that.

• ##### Karlsays:

I see.

Then this amortization schedule will create a generic, but with dates loan schedule that will accurately show the interest assuming payment were made when they were due.

If you need something less generic, where you can record the payments as they came in, and that will calculate the balance due as of any date (and the interest paid to date), then this calculator is the better choice.

• ##### Gregsays:

The Ultimate Loan Payoff Calculator is quite helpful but it needs to be changed for debt recovery purposes. For example, all references to a loan and a payment frequency have to removed. Also, I need to claim interest at a monthly rate (if applicable) not just an annual rate. Can this be done?

• ##### Karlsays:

The C-Value! program, which works like the UFC, allows the user to set the label descriptions (under settings and event names).

Adding the the ability to select interest rates based on a month, would be quite costly. The calculator is complex and to add the feature would take a lot of testing. I’m not inclined to do it because no one (as I recall) has ever asked for the feature. If someone wanted a custom version it could be arrange, but it would be in the 5 figures.

However, as I believe I mentioned before, one could convert a monthly rate to an annual rate. For example, a monthly rate of 1.2% is equal to an annual rate of 14.4% (1.2 x 12). Both values return 488.71 interest on \$10,000 for 4 months.

• ##### Natesays:

If I had a loan of \$100 at 5% and I wanted to compound annually with 360 days in a year, I noticed that at 364 days, gain on investment is \$5.06. If you put in 365 days, my gain on investment is down to \$5. Why is that?

• ##### Karlsays:

This is due to the oddities of calendars and interest calculations.

With annual compounding, the interest rate used is the nominal rate, that is 5% or 0.05. Invest the money for 365 days (assuming the time period does not span a leap year) and the money will be invested for one year and the 5% rate is used.

But, invest the money for 364 days, and since that is less than a year, the annual compounding rate is not applicable. 364 days are all odd days, and therefore the daily rate is used. Since you’ve picked a 360 day year, the interest rate used will be 0.05/360.

One more comment. So you know, I generally do not discuss financial equations. That’s not what this site is about. I can’t afford to spend the time, “getting into the weeds.” Therefore, I limit the question I answer to “What calculator do I use?” and “How do I used this calculator or feature”?

• ##### Folasays:

Hi great work done,

Can i get a FV calculator with irregular monthly payments but same interest rate.

• ##### Md.Imran Hossainsays:

How I can use this calculator on my wordpress website?

• ##### Endisays:

Hi Karl,

I would like to know how much life insurance cover I need based on:
– Monthly expenses or income
– Inflation rate
– Periode of coverage

Which calculator should I use to calculate sum amount of coverage?

Thank you Karl

• ##### Karlsays:

Hi Endi, this is a good question. And it’s one that I’ve not spent much time thinking about, and others might have their own opinion. Thus, take this answer with that caveat!

I believe all you need to do is add up the what you want to insure. So, if you want to buy life insurance to insure 20 years of income, and your annual income is \$100,000 then buy \$2 million dollars insurance.

Here’s the thing. If the insured dies, the beneficiaries will receive the \$2 million at the time of death as a lump sum. As long as the proceeds from the policy are invested and the investment earns a return that matches the inflation rate, then you do not need to worry about the impact of inflation. That is, you do not need to buy more than the sum of the income because inflation will erode its purchasing power.

On the other hand, if you think that the money can be invested for more or less than the inflation rate, then you can make an adjustment. In that case, use this present value of an annuity calculator. Using the above example, you would enter for "Regular Cash Flow Amount" the \$100,000.

Entering the right "Annual Discount Rate" is the key.

If you think that you can invest the money and earn an average annual rate of return of say 7% and you think over the same period of time, the rate of inflation will be 5% then for the discount rate, you’ll need to enter 2% (the difference between the investment return and the inflation rate). And in that case, you’ll need less than \$2 million of insurance.

On the other hand, if you think that inflation is going to be 5%, but your investments will earn only 3.5% then you need to enter -1.5% as the discount rate, Then you’ll see that you’ll need more than \$2 million of insurance.

Hope this helps. (And I hope I didn’t miss anything!)

• ##### Endisays:

Dear Karl,

Thank you so much for your response. What you describe in your response is one of several ways to provide insurance, I totally agree of you’ve shared.

The other day I saw an Indonesian website (a broker site) which provides two calculators to calculate the insurance need.

Calculator A will calculate insurance need based on monthly expenditures, and Calculator B will calculate insurance need based on monthly income.

Cases solved with those two calculators is like this:
If someone has USD 1,000 monthly expenditures (or monthly income), and plan on insurance coverage for 5 years, with 3% of inflation rate, that person will need xxx amount of insurance cover so his/ her family could survive for 5 years.
*xxx is the calculation result.

Variables which should be entered on the calculator are:

a. Current monthly expenditures/ income: ______
b. Amount of year will be covered by insurance: ______
c. Yearly inflation rate: ______
The result will be the minimum amount insurance needed.

I tried to calculate of the case above using Future Value of Annuity (FVoA), but the calculation result was different!

Using the calculator on the site, calculation result is 63,710
And if I’m using FVoA, the result is 64,647

I assume that maybe the calculator on the site is not using FVoA, and I don’t have any idea what method they’re using to make the calculation.

Giving the situation above, I hope maybe you could help to identify what method of calculation they are using to calculate the minimum total sum insured, so the result would be the same as what calculated on the site.

Thank you Karl.

• ##### Karlsays:

I’ve not had a chance to look at, let alone study the other calculator, but on this site, the Ultimate Financial Calculator will create a schedule that shows you you do not need to factor inflation into the calculation when buying life insurance.

This assumes that if there is a death, the proceeds are invested at an investment return that is equal to the inflation rate. Take the example I proposed in my prior comment, \$100,000 income for 20 years. That’s \$2 million in total income. Buy a \$2 million policy.

Now, use the UFC calculator to see what happens. Let’s assume a 5% inflation rate. In the calculator, enter:

Initial Interest Rate?: 5.0000%
Initial Compounding?: Annually
Schedule Type?: Savings
Calculate Method?: Normal

In the first row, enter, as a deposit, \$2,000,000 and for #period enter 1 i.e. 1 deposit.
In the 2nd row, enter withdraw with the same date as the deposit,
continue in the second row, enter \$100,000 and #period 20 and frequency Annually

Now, this is the key, in the rightmost column in the second row, click on "Cash Flow Options," and in the window that opens, select "Percent Step," Starting amount should already show \$100,000. Enter 5% as the step amount ("Percent change per level"). That is, you enter your assume inflation rate here. Leave "Number made before change" as 1. Make sure you select Activate “Percent Step” for currently selected series!

Click "Save Changes" to close.

One the main calculator, now click the "Schedule" button. (You can skip the title page options.)

If you look at the schedule, you’ll see that the withdrawals (your income) increase by 5% each year. And at the end of the 20 years, the balance will be very close to 0. Shows you that the \$2 million dollar life insurance lasted 20 years and increased by 5 percent each year. This is because the Initial Interest rate (the investment return) equals the step percentage (the income increase each year).

What do you think?