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Do you know that a future value calculator is different from a future value calculator annuity? An annuity is a regular flow as opposed to a one-time investment. Hence when there are regular flows where you must calculate the future value, you need to use the future value calculator annuity. This is a subset of the future value calculator.

We will first look at the concept of future value and why assets and investments have a future value? Then we will look at the applications of future value calculator India and how the future value calculator India can be used as a veritable tool of making scientific estimates of the future value of investments. But, first some basics.

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To constrict the explanation, the future value concept helps individuals to make a reasonable estimate of what their savings and investments would be worth at the end of a few years. A future value calculator online which is available on various websites helps to figure out if the value of their savings would be adequate to meet their liabilities arising after a few years. From an actional decision point of view, this future value calculator can help you determine the corrective action to be taken in the form of increasing your savings, extending your tenure or even taking on more risk to earn more returns.

A future value calculator India can be practically applied to all types of investments and this includes bonds, equities, debentures, gold bonds etc. The concept of future is absolutely central to investing, saving, financial planning and financial advisory. In short, financial services cannot survive in the absence of the proper application of future value. A future value calculator makes it easy to forecast revenues you can earn and grow to meet various liabilities over time.

Let us first understand how to use the concept of future value before getting down to the use of the future value calculator.

Here is the formula to calculate the future value

P = Initial value or the investment made

R = Rate of interest that is compounded annually

T = Duration in years for calculating future value

The above can be used for a basic lump sum future value calculator. This is normally, a very simple assumption. In reality, there are intermittent cash flows called annuities so you have to calculate the future value of such annuities. Normally, the future value calculator also imputes such annuities into the formula to give you the future value.

Future value calculator needs some basis inputs. That includes the initial investment, the annuity flows, the rate of increase in annuity flows, the rate of interest, the tenure, the frequency of compounding within a year etc. Once you input all this data, the future value calculator will give you the output as per your requirement.

The future value calculator is an extremely useful tool to estimate the future value of a lump sum and of annuities.

The **future value calculator** determines the future worth (FV) of an investment based on a consistent stream of deposits, a fixed interest rate (r), and a specific time frame (t). Here's **how to calculate future value:**

A = PMT * ((1 + r/n)^(nt) - 1) / (r/n)

Note that this formula assumes that the deposits are made at the conclusion of each time, whether it's monthly or annually.

Where:

A = Future Value of the Investment

PMT = Payment amount for each time period

n = Number of compounding occurrences per time period

t = Number of time periods the money is invested **Example**

For instance, consider a scenario where you deposit Rs 10,000 at the end of each month with an 8% interest rate compounded monthly (equivalent to 12 compounding periods per year). You can determine the investment's value after ten years using the following calculations:

Using the **future value formula calculator** for deposits made at the end of each period:

PMT = Rs 10,000

n = 12 (representing the 12 compounding periods per year)

t = 10 years

A = 10,000 * (((1 + 0.08/12) ^ 120) - 1) / (0.08/12)

A = Rs 18,29,460.

However, if deposits were made at the beginning of each period, you would employ a modified mathematical formula:

A = PMT * (((1 + r/n) ^(nt) - 1) / (r/n)) * (1 + r/n)

Let's perform the calculation using the same parameters as before:

A = 10,000 * (((1 + 0.08/12) ^ 120 - 1) / (0.08/12)) * (1 + 0.08/12)

A = Rs 18,17,345.

The future value formula, in its most basic form, comprises the current value of an asset or investment, the interest rate, and the number of periods between the current and future dates. Calculating the future value can be approached in two ways:

- Simple interest is applied when the annual interest is calculated on the fixed principal amount each year during the investment period.
- The future value formula for simple interest is: FV = (P * n * r) + P
- Here, P represents the initial investment value, n denotes the number of years, and r signifies the simple interest rate.

- Compound interest involves calculating interest on the previous closing balance each time, making it interest on interest.
- The future value formula for compound interest is: FV = PV * (1 + r/n)^(t*n)
- In this formula, PV represents the initial value, r is the interest rate, t stands for the investment tenure, and n denotes the frequency of compounding per year.

However, if you want to find the future value of a series of periodic payments, such as an annuity, you should use the following formula:

- FV = P * [((1 + r/n)^(n*t) - 1) / (r/n)]
- In this context, P stands for the periodic instalment, t represents the investment tenure, n is the compounding frequency, and r is the interest rate.

- The IIFL
**Future Value Calculator**provides a glimpse of the potential future sum that can be amassed by investing a specific amount at a designated time. - You have the option to select an investment that yields returns exceeding the rate of inflation over an extended duration.
- This calculator aids in determining whether adjustments such as increasing the deposit amount or altering the frequency of deposits are necessary, and it also assists in pinpointing the investment choice that offers the most favourable return on investment.

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- 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
- On an average, loss makers registered net trading loss close to Rs. 50,000.
- Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
- Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.

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Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213, IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248

This certificate demonstrates that IIFL as an organization has defined and put in place best-practice information security processes.

- Prevent Unauthorized Transactions in your demat / trading account Update your Mobile Number/ email Id with your stock broker / Depository Participant. Receive information of your transactions directly from Exchanges on your mobile / email at the end of day and alerts on your registered mobile for all debits and other important transactions in your demat account directly from NSDL/ CDSL on the same day." - Issued in the interest of investors.
- KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (broker, DP, Mutual Fund etc.), you need not undergo the same process again when you approach another intermediary.
- No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account."

www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.

- 9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
- On an average, loss makers registered net trading loss close to Rs. 50,000.
- Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
- Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.

Copyright © IIFL Securities Ltd. All rights Reserved.

Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213, IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248

This certificate demonstrates that IIFL as an organization has defined and put in place best-practice information security processes.