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What Is Future Value?
Future Value (FV) is the value of a current asset at a specified date in the future, based on an assumed rate of growth. It's a core concept in finance and investing: understanding how much your money will be worth in the future helps you make better decisions about saving, investing, and retirement planning.
Future Value Formulas
Lump sum (single investment):
Text
FV = PV × (1 + r)ⁿ
Where:
PV = Present Value (initial investment)
r = Interest rate per period (decimal)
n = Number of periods
Example: $10,000 invested at 7% annually for 10 years
FV = $10,000 × (1.07)¹⁰ = $10,000 × 1.9672 = $19,672Regular contributions (annuity):
Text
FV = PMT × [(1 + r)ⁿ - 1] / r
Where PMT = payment per period
Example: $500/month at 7%/year (0.583%/month) for 30 years
FV = $500 × [(1.00583)³⁶⁰ - 1] / 0.00583 = $566,764The Power of Compound Interest
| Years | $10,000 at 5% | $10,000 at 7% | $10,000 at 10% |
|---|---|---|---|
| 10 | $16,289 | $19,672 | $25,937 |
| 20 | $26,533 | $38,697 | $67,275 |
| 30 | $43,219 | $76,123 | $174,494 |
| 40 | $70,400 | $149,745 | $452,593 |
JavaScript Implementation
JavaScript
function futureValue(pv, annualRate, years, monthlyContribution = 0) {
const r = annualRate / 100 / 12; // monthly rate
const n = years * 12; // total months
// Lump sum growth
const fvLump = pv * Math.pow(1 + r, n);
// Annuity growth (monthly contributions)
const fvAnnuity = r > 0
? monthlyContribution * (Math.pow(1 + r, n) - 1) / r
: monthlyContribution * n;
return fvLump + fvAnnuity;
}
// $10,000 initial + $500/month at 7% for 30 years
console.log(futureValue(10000, 7, 30, 500).toFixed(2));
// → "643,097.00"