The Future Value is a disciplined investment method in mutual funds or other securities. It allows investors to secure a fixed amount regularly, usually monthly, to a mutual fund scheme. This disciplined approach to investing helps build wealth over time by taking advantage of market fluctuations through rupee cost averaging and the power of compounding. Whether you are a beginner or an experienced investor, the Future Value offers a convenient way to grow your wealth systematically.
How to Use the Future Value Calculator?
Using the Future Value Calculator is simple. Here are the steps to estimate your potential returns:
- Enter the Monthly Future Value Amount
Enter the amount you wish to invest in the Future Value every month.
- Investment Duration
Specify the years you plan to continue the Future Value.
- Expected Annual Return
Input the expected annual rate of return on your investment.
- Read the Outputs
Once you have inputted these details, the calculator will provide you with the following results:
- Maturity Amount: This is the total value of your investment at the end of the investment period, including returns.
- Total Investment: This represents the total amount you have invested throughout the Future Value.
- Total Returns: This is the profit earned from the Future Value investment.
Formula to Calculate Future Value
The Future Value Calculator uses an easy formula to project the growth of your investment. The formula is:
A = P*((1+i) ^ n) - 1) / i) * (1+i)
Where:
A = Maturity Amount
P = Monthly Future Value Amount
i = Expected Annual Return (in decimal)
n = number of months (typically 12 for monthly Future Values)
Example of Future Value Calculation
Let's see an example of how this Future Value Calculator works.
Monthly Future Value Amount (P): ₹5000
Investment Duration (t): 25 years
Expected Annual Return (i): 12% (0.12 in decimal form)
Number of Months (n): 12 * 25 (since it's a monthly Future Value)
Formula:
A = P * ((1+ i) ^ n) - 1) / i) * (1+i)
A = 5000 * ((1 + 0.01) ^ 300) - 1) / 0.01) * (1+0.01)
A = 5000 * ((1.01) ^ 300) - 1) / 0.01) * (1.01)
A = 5000 * (19.78 - 1) / 0.01) * (1.01)
A = 5000 * (18.78 / 0.01) * (1.01)
A = 5000 * 1878 * 1.01
A = 94,83,900
Final Results:
Maturity Amount (A): ₹94,83,900
Total Investment: ₹15,00,000 (₹5,000 per month for 300 months)
Total Returns: ₹79,83,900 (Maturity Amount - Total Investment)
In this example, with a monthly Future Value of ₹5,000 and an expected annual return of 12%, your investment could grow to ₹94,83,900 over 25 years using this formula.
Future Value Investment Returns of Different Mutual Funds
Benefits of Using the Future Value Calculator
Using the Future Value calculator has several advantages, such as:
- Accurate Forecasting: The calculator uses a standard formula to give you precise estimates of your investment's future value.
- Time-Saving: Instead of manually calculating potential returns, the Future Value calculator provides instant results with just a few clicks.
- Informed Decision-Making: You can visualise different investment scenarios to choose the Future Value plan that best suits your financial goals.
- User-Friendly: The calculator is designed to be easy to use, even for those new to investing.
Conclusion
The Future Value Calculator is helpful for anyone looking to invest in mutual funds through a systematic approach. It simplifies estimating potential returns and helps you plan your investments more effectively. Whether you're saving for retirement, a child's education, or any other financial goal, this calculator provides valuable insights into how your money can grow over time. Start using the Future Value Calculator today to take control of your financial future.
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