Future Value Calculator
Project the future value of a lump sum investment, a series of regular contributions, or both combined. Enter a starting balance, an expected annual return, a time horizon, and optional recurring deposits. The calculator returns the ending balance in nominal dollars and, optionally, in inflation-adjusted (real) dollars. Built by the Reed Corporation CPA team for clients who want a clean projection before deciding on savings rate, asset allocation, or retirement timing.
Calculator
Investment inputs
How the future value calculation works
The future value of a lump sum is FV = PV x (1 + r/n)^(nxt), where PV is the present value, r is the annual return, n is the number of compounding periods per year, and t is years. For recurring contributions (an annuity), the formula is FV = PMT x [((1 + r/n)^(nxt) – 1) / (r/n)], where PMT is the periodic payment. The calculator combines both: grow the initial balance separately, grow the contributions as an annuity, then sum the two.
The inflation adjustment divides the nominal future value by (1 + inflation rate)^years. This converts the projected balance into today’s purchasing power — useful for retirement planning where the nominal balance looks large but the real value is what matters for spending.
The Rule of 72: divide 72 by the annual return to estimate how many years it takes to double your money. At 7%, money doubles roughly every 10.3 years. At 10%, every 7.2 years. Compounding is slow at first and dramatic at the end — the last decade of a 30-year projection typically contains more growth than the first two decades combined.
Return rate assumptions
The historical average annual return of the S&P 500 is approximately 10% nominal (7% real after inflation) over long periods. A diversified portfolio with bonds typically returns 6-8% nominal depending on allocation. For retirement projections, most financial planners use 6-7% nominal as a conservative assumption, with 3% inflation producing a ~3-4% real return expectation.
Sequence-of-returns risk is not captured by a simple future value calculator: the order of good and bad years matters when withdrawals are occurring. A 7% average return with a bad stretch in the first few years of retirement damages a portfolio far more than the same bad stretch near the end of accumulation. For distribution-phase planning, Monte Carlo simulations provide more realistic projections than deterministic compound interest formulas.