Present & future value calculator
Grow a sum forward or discount it back at a rate, with regular contributions.
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How it's calculated
Money grows by a factor of (1 + i) each compounding period, where i is the yearly rate divided by the periods in a year, so after n periods a lump sum is multiplied by (1 + i)^n. A regular contribution at the end of each period grows to the annuity sum, contribution × ((1 + i)^n − 1) ÷ i. Future value adds the two. Present value runs it backwards: the target, less what the contributions alone will reach, divided by the growth factor, is what you need today. The effective annual rate is the single yearly rate that would give the same result as the compounding.
What is the difference between present value and future value?
They are the same relationship read in opposite directions. Future value asks what a sum today becomes after earning a rate for some years; present value asks what a sum in the future is worth today, or what you must set aside now to reach it. $10,000 at 6% compounded monthly becomes about $18,194 in ten years; $10,000 needed in ten years is worth about $5,496 today.
What rate should I use?
For savings, the account rate; for investments, a long-run expected return (6–7% real for a stock index, less for a mix); for discounting a future payment, the return you could get elsewhere or the inflation rate if you want today's purchasing power. The answer is sensitive to it, so try a range.
Does compounding frequency matter much?
Less than people expect at normal rates. 6% compounded yearly gives an effective 6.000%; monthly 6.168%; daily 6.183%. It matters more at high rates and over long periods, and it matters for comparing accounts that quote the same nominal rate.
Results are estimates for informational purposes only and are not financial, medical or legal advice.