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. Understanding future value helps investors and savers determine how much an investment made today will be worth in the future, accounting for compound growth.

The future value of a lump sum grows with compound interest over time. The future value of an annuity (series of equal periodic payments) grows through both the contributions and the compounding of returns. These calculations are fundamental to retirement planning and long-term financial goal setting.

The choice of interest rate significantly affects the future value. Higher rates produce exponentially larger future values over long time horizons due to the power of compounding, which is why starting to save early is one of the most powerful strategies for building wealth.