How does Future Value Calculators work?

The future value calculator calculates the future value (FV) of an investment for a series of regular deposits, on a set rate of interest (r), and the number of years (t).

You must use the mathematical formula:

A = PMT ((1+r/n)^nt – 1) / (r/n))

(The formula assumes the deposits are made at the end of each period such as month or year).

A = Future Value of the Investment
PMT = Payment amount for each period
n = Number of compounds per period
t = Number of periods the money is invested

For example, you deposit Rs 10,000 per month (The deposit is made at the end of each month) at an interest rate of 8% compounded monthly. (This is 12 compounds per period). You may calculate the value of the investment after 10 years as follows:

PMT = Rs 10,000
n = 12 (Number of compounds per period is 12 for monthly compounding)
t = 10 years

A = (10,000(((1+0.08/12)^(120) – 1) / (0.08/12)))
A = Rs 18,29,460.

You have the mathematical formula if deposits are made at the beginning of each period:

A = PMT (((1 + r/n)^(nt) – 1) / (r/n)) * (1+r/n)

Let’s do the calculation with the same figures as above.

A = 10,000 (((1+0.08/12)^120 -1) / (0.08/12) * (1+0.08/12)

A = 18,17,345

How to use the ClearTax Future Value Calculators?

The ClearTax Future Value Calculator shows you the future value of your investments in seconds. To use the ClearTax Future Value Calculator:

• You must enter the monthly investment.
• Enter the annual interest.
• You then select the compounding as monthly, quarterly, half-yearly, or yearly.
• Enter 0 as the Present Value.
• Select the number of years for the investment.
• You then select PMT as the beginning or end of each compound period.
• The ClearTax Future Value Calculator displays the future value of the investment.

Benefits of ClearTax Future Value Calculator

• The ClearTax Future Value Calculator shows you how much amount is accumulated in the future if you invest a certain amount at a particular time.
• You can choose an investment that offers a return above inflation over the long-term.
• The calculator helps you decide if you must increase the deposit amount, the number the times you deposit the investment and also choose the investment option where you get the best return on investment.

FAQs on the ClearTax Future Value Calculator

Why does ClearTax Future Value Calculator ask for the period of compounding of the interest rate?
Compounding is a process where the earnings of the assets are reinvested to earn additional earnings over time. The compounding period is a period when the interest was last compounded and when it will be compounded again.
Interest may be compounded on any frequency schedule from daily to annually. However, when you calculate compound interest, the period of compounding makes a significant difference.
For example, the amount of compound interest that accrues on Rs 10,000 compounded at 8% annually for five years, will be lower as compared to Rs 10,000 compounded quarterly, at the same rate of interest over the same period. The ClearTax Future Value Calculator takes the period of compounding into account when calculating the future value of your investment.
How does the ClearTax Future Value Calculator help me?
Well, you can calculate the future value of your investments. It helps you to set financial goals such as buying a dream house, doing retirement planning, or investing for a child’s higher education and marriage.
The ClearTax Future Value Calculator shows you the future value of your investments, depending on the rate of interest and period you select for the requisite investment. You may calculate the future value of investments at different interest rates and over the various periods to select the best investment.
Is the ClearTax Future Value Calculator easy to use?
You may use the ClearTax Future Value Calculator from the comfort of your house and calculate the future value of your investments in seconds.
How does ClearTax Future Value Calculator help your business?
Businesses would consider the time value of money before investing in a project. They need to know the future value of the investment, as compared to today’s present value. The future earnings help the business decide if the current investment in the project has benefits over the long-term.