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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More About Future Value
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?
FV Calculator Help
Calculates the future value of a single amount. Use the "future value schedule" if you want to calculate the future value of a series of investments or deposits.
Enter the present value (amount invested) and a nominal annual interest rate.
Date Math: If you change either date, the number of days will be calculated. If you enter a positive number of days, the end date will be updated. If you enter a negative number of days the start date will be updated.
The above means you can calculate the FV for a specific number of days and not worry about what the dates are. If you need to know the FV after 31 days, then enter 31 for the number of days and don't worry about the dates.
Set the compounding and the days per year. Click "Calc". The future value is calculated (initial amount plus the gain).
The gain may be calculated based on a unit of time, say a month. In that case, a month's gain is always the same for the same annual rate and same principal balance regardless of the length of the month. Given $10,000 principal and an annual rate of 6.75% the gain will be the same for February as it will be March.
Tips when entering dates
Pick the date format you want to use by clicking on the "$ : MM/DD/YYYY" in the lower right corner of any calculator. You'll have 3 formatting options.
You may set a date by clicking on the calendar button [] or by typing 8 digits per the selected date format.
If you are using the calendar, to quickly change to a new date, you may click on the current month's name at the top to see a list of months and then you may click on the year to see a list of years. Pick the year. Pick the month. Finally pick the date. Or click on the word "Today" to set to the current date.
If you are using the keyboard. Type only the 8 required digits. Do not type the date part separators ("/" or "-"). When you either tab to a date input or single click on a date, it will be selected. You can just start typing to clear. No need to delete the date. Or you can type the right arrow key to clear the selection and backspace to edit. Depending on the date format selected, you can backspace to clear the last 2 digits of a year and reenter them to change dates by multiple years very quickly.
Greg Mettam says:
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?
Karl says:
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.
Greg says:
Hi Karl and thanks for your reply.
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.
Karl says:
hi Greg, by any chance does this debt calculator have what you need?
Greg says:
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.
Karl says:
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.
Greg says:
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?
Karl says:
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.
Nate says:
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?
Karl says:
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”?
Fola says:
Hi great work done,
Can i get a FV calculator with irregular monthly payments but same interest rate.
Karl says:
Thank you. You sure can. Please see this calculator. Scroll down the page and see tutorial #19, future value calculation with complex cash flows.