Home
Back
Future Value Formula:
| From: | To: |
The Market Mutual Fund Calculator estimates the future value of a lump-sum mutual fund investment using compound interest principles. It helps investors project the growth of their investments over time based on expected returns.
The calculator uses the future value formula:
Where:
Explanation: The formula calculates how much an initial investment will grow over time with compound interest, where earnings are reinvested to generate additional earnings.
Details: Understanding future value helps investors make informed decisions about investment strategies, retirement planning, and financial goal setting. It demonstrates the power of compounding over time.
Tips: Enter principal amount in USD, annual interest rate as a decimal (e.g., 0.08 for 8%), and number of investment periods. All values must be positive numbers.
Q1: What is compound interest?
A: Compound interest is interest calculated on the initial principal and also on the accumulated interest from previous periods, creating exponential growth over time.
Q2: How does this differ from simple interest?
A: Simple interest is calculated only on the principal amount, while compound interest includes interest on both principal and accumulated interest, leading to faster growth.
Q3: What are typical mutual fund returns?
A: Returns vary by fund type and market conditions. Stock mutual funds historically average 7-10% annually, while bond funds typically yield 3-5%.
Q4: Can this calculator account for regular contributions?
A: No, this calculator is for lump-sum investments only. For regular contributions, you would need a different formula that accounts for periodic investments.
Q5: How accurate are these projections?
A: Projections are based on constant returns and don't account for market volatility, fees, taxes, or inflation. Actual results may vary significantly.