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If you have read my previous post about setting SMART financial goals, you may need a way to calculate the future value of money.

For example, you want to save enough money for your child’s education in 15 years time. How do you know how much to save?

I have written a simple future value calculator based on the future value formula:

FV = PV(1+i)ⁿ

Where:

FV = Future value of money
PV = Present value of money
i = Percentage of interest per period
n = Period (years or months)

Now, don’t get too worried about the math. Future value of money is the future value of the money you have today.

To calculate future value, we normally use an estimated annual inflation rate in the i column.

If you want to use this calculator to estimate compounded return of investment, you would put the expected annual returns in the i column.

There are quite a few methods for future value calculations, but I find this the simplest.

Future Value Calculator

Present value of money
Interest per period (%)
Period (years or months)
Future value

Warning: Using this calculator can cause stressful and sleepless nights. I bet you didn’t know you needed so much money!

If you wanted to estimate how much your child’s education will cost, you will put in a present value based on the current education cost.

Let’s say a local college degree will cost RM35000 per year. Multiply by three years and you will get RM105000.

Let’s put in a conservative inflation rate of 4.5%, and assume we have 15 years before your child finishes secondary school.

Using the calculator you will see that you need to accumulate RM203,204!

Spreadsheet FV Function

If you are using a spreadsheet program, you can use the FV function to achieve the same.

The Microsoft Excel Future Value Calculation formula is:

=FV(i, n, pmt, PV)

Where:

i = Percentage of interest per period
n = Period (years or months)
pmt = Fixed payment amount. Use zero for future value.
PV = Present value of money

Conclusion

I hope this can help you in your financial planning.

As I have mentioned, you can really get worried looking at the huge numbers.

Don’t worry too much. You should be fine if your savings and investments give you returns that beat the inflation rate.

Note: You are free to embed this calculator on your website as long as you retain a link back to this web page.

Just copy and paste the script below:
<br /> <table width=350 border=0 style="border-width: medium medium medium medium; border-spacing: 1px; border-style: solid solid solid solid; border-collapse: separate;"> <tr> <td width=60%>Present value of money</td> <td width=40%> <input id=pv width=20 maxlength=10 value=0.00 /></td> </tr> <tr> <td>Interest per period (%)</td> <td> <input id=i width=20 maxlength=3 value=0.00 /></td> </tr> <tr> <td>Period (years or months)</td> <td> <input id=n width=20 maxlength=3 value=0 /></td> </tr> <tr> <td><strong>Future value</strong></td> <td> <input id=fv width=20 readonly=true value=0.00 /></td> </tr> <tr> <td colspan=2 align=center> <input type=button value=Calculate onclick="document.getElementById('fv').value = Math.round (document.getElementById('pv').value * Math.pow( (1 + (document.getElementById('i').value/100.00)), document.getElementById('n').value ) * 100) / 100;" /> </p> <input type=button value=Reset onclick="document.getElementById('pv').value='0.00'; document.getElementById('i').value='0.00'; document.getElementById('n').value='0'; document.getElementById('fv').value='0.00'" /></td> </td> </tr> </table> <p><a href="http://www.adinochang.com/archives/future-value-calculator.html">Future Value Calculator</a> by <a href="http://www.adinochang.com">Adino Chang</a>

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