Future Value of Annuity Calculator
Projection Summary
Total Maturity Value
$0.00Total Invested Principal
$0.00Accumulated Yield
$0.00Understanding the Future Value of an Annuity
The Future Value (FV) of an annuity represents the total value of a series of recurring payments at a specific date in the future, based on a projected growth rate. This mathematical concept is critical for retirement planning, sinking funds, and long-term savings strategies where consistency is key.
The Calculation Logic
The math behind this calculator depends on whether payments are made at the start or the end of the period:
- Ordinary Annuity: Payments are made at the end of each interval (e.g., month-end). This is the standard for most consumer financial products.
- Annuity Due: Payments are made at the beginning of each interval. This allows each payment an extra period to earn interest, resulting in a higher total future value.
Mathematical Formula
FV = P × [((1 + r)n – 1) / r]
Where:
- P = Periodic contribution amount
- r = Growth rate per period (Annual rate / number of periods per year)
- n = Total number of periods (Years × periods per year)
Real-World Example
Suppose you contribute $300 every month into a fund with an annual growth rate of 6% for 10 years.
- Monthly Rate: 0.06 / 12 = 0.005
- Total Periods: 10 × 12 = 120
- Total Contributions: $300 × 120 = $36,000
- Future Value: Approximately $49,152.06
- Total Growth: $13,152.06 earned through compound returns.
By adjusting the frequency and timing, you can see how even small changes in contribution habits significantly impact the final maturity value over long horizons.