1. What is Future Value Calculation?

The Future Value (FV) calculation determines how much an investment made today will grow to at a specific interest rate over a certain period. It's a fundamental concept in finance that helps in investment planning and decision making.

2. How Does the Calculator Work?

The calculator uses the Future Value formula:

Where:

• \( FV \) — Future Value in INR
• \( P \) — Principal amount in INR
• \( r \) — Annual interest rate (in decimal)
• \( n \) — Number of years

Explanation: The formula accounts for compound interest, where interest earned each year is added to the principal for the next year's calculation.

3. Importance of Future Value Calculation

Details: Understanding future value helps in financial planning, comparing investment options, and setting realistic savings goals. It's particularly important for retirement planning and long-term investments.

4. Using the Calculator

Tips: Enter principal amount in INR, annual interest rate in percentage, and number of years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this calculator account for monthly compounding?
A: No, this calculator assumes annual compounding. For monthly compounding, the formula would need adjustment.

Q2: How does inflation affect future value?
A: This calculator shows nominal future value. For real (inflation-adjusted) value, you would need to subtract expected inflation from the interest rate.

Q3: Can I use this for SIP calculations?
A: No, this is for lump-sum investments. SIP calculations require a different formula accounting for regular contributions.

Q4: What's the difference between FV and present value?
A: FV calculates what an amount today will be worth in the future, while present value calculates what a future amount is worth today.

Q5: Are taxes considered in this calculation?
A: No, this is a basic calculation. For accurate planning, consider tax implications on your investment returns.