Future Value of an Annuity Calculator
Visualize how regular, consistent investments can grow over time with the power of compound interest.
Investment Parameters
Projected Growth
Future Value
$86,542.40
Total Principal
$60,000.00
Total Interest
$26,542.40
Understanding the Future Value of an Annuity
The Future Value (FV) of an annuity is the total value of a series of equal payments at a future date, assuming a specific interest rate. It's a fundamental concept in finance that demonstrates the power of compound interest. By making regular contributions to an investment or savings account, your money doesn't just add up—it grows exponentially as your interest starts earning its own interest.
This calculator uses the standard formula:
FV = Pmt * [((1 + r/n)^(nt) - 1) / (r/n)]
- Pmt: The amount of each regular payment.
- r: The annual interest rate (expressed as a decimal).
- n: The number of times interest is compounded per year.
- t: The number of years the money is invested for.
This concept is crucial for planning for long-term financial goals like retirement, saving for a down payment on a house, or funding a child's education.
Year-by-Year Growth Breakdown
| Year | Starting Balance | Annual Contribution | Interest Earned | Ending Balance |
|---|---|---|---|---|
| 1 | $0.00 | $6,000.00 | $196.29 | $6,196.29 |
| 2 | $6,196.29 | $6,000.00 | $644.22 | $12,840.52 |
| 3 | $12,840.52 | $6,000.00 | $1,124.53 | $19,965.05 |
| 4 | $19,965.05 | $6,000.00 | $1,639.57 | $27,604.62 |
| 5 | $27,604.62 | $6,000.00 | $2,191.83 | $35,796.45 |
| 6 | $35,796.45 | $6,000.00 | $2,784.02 | $44,580.47 |
| 7 | $44,580.47 | $6,000.00 | $3,419.02 | $53,999.49 |
| 8 | $53,999.49 | $6,000.00 | $4,099.92 | $64,099.41 |
| 9 | $64,099.41 | $6,000.00 | $4,830.04 | $74,929.45 |
| 10 | $74,929.45 | $6,000.00 | $5,612.95 | $86,542.40 |
Frequently Asked Questions
What is the difference between an ordinary annuity and an annuity due?
This calculator is for an ordinary annuity, where payments are made at the end of each period (e.g., end of the month). An annuity due has payments made at the beginning of each period. This results in a slightly higher future value because each payment has one extra period to earn interest.
How does the compounding frequency affect the future value?
The more frequently interest is compounded, the faster your investment grows. For example, compounding monthly (12 times a year) will result in a higher future value than compounding annually (once a year), even with the same annual interest rate. This is because interest is calculated and added to your principal more often, which then starts earning its own interest sooner.
What are the limitations of this calculation?
This calculation assumes a fixed interest rate and consistent payments over the entire period. In reality, investment returns can fluctuate, and you might change your payment amount. This tool is best used as a projection to understand the potential of long-term saving, not as a guarantee of future performance.