GlossaryBeginner
Future Value
The projected value of a current sum (or series of contributions) at a future date, after compounding at an assumed rate of return.
Future value projects what a current sum of money — or a starting amount plus a series of regular contributions — will be worth at a future date, after compounding at an assumed rate of return over the intervening period.
It's the conceptual mirror image of present value (see Kaavon's "Present Value" glossary definition): present value discounts a future sum back to today, while future value projects a current sum forward in time. See Kaavon's Future Value calculator for the full compounding calculation.
Examples
- Future value projects how a starting amount plus regular monthly contributions grows over time, assuming a given rate of return compounded regularly.
- Future value and present value are mirror-image calculations: one projects forward in time, the other discounts backward.