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Mutual Fund Future Value Formula:
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The Mutual Fund Future Value Calculator estimates the future value of regular monthly investments in a mutual fund, taking into account compound interest over time. It helps investors plan their financial goals and understand the power of systematic investment.
The calculator uses the future value of annuity formula:
Where:
Explanation: This formula calculates the future value of a series of equal monthly payments (annuity) earning compound interest at a fixed rate.
Details: Understanding future value helps investors make informed decisions about retirement planning, education funding, and long-term financial goals. It demonstrates the benefits of regular investing and compound growth.
Tips: Enter monthly payment amount in USD, monthly interest rate as a decimal (e.g., 0.005 for 0.5%), and number of months. All values must be positive numbers.
Q1: What is the difference between annual and monthly compounding?
A: Monthly compounding calculates interest each month, which can result in higher returns compared to annual compounding due to more frequent compounding periods.
Q2: How do I convert annual interest rate to monthly?
A: Divide the annual rate by 12. For example, 6% annual rate becomes 0.06/12 = 0.005 monthly rate.
Q3: What assumptions does this calculator make?
A: It assumes fixed monthly payments, constant interest rate, and regular compounding at the end of each month.
Q4: Can I use this for other regular investments?
A: Yes, this formula works for any regular investment plan with fixed payments and compound interest, such as SIPs in mutual funds.
Q5: What if the interest rate is zero?
A: When interest rate is zero, the future value is simply the total of all payments (PMT × n).