What is 'Future Value  FV'
Future value (FV) is the value of a current asset at a specified date in the future based on an assumed rate of growth.
If, based on a guaranteed growth rate, a $10,000 investment made today will be worth $100,000 in 20 years, then the FV of the $10,000 investment is $100,000. The FV equation assumes a constant rate of growth and a single upfront payment left untouched for the duration of the investment.
BREAKING DOWN 'Future Value  FV'
The FV calculation allows investors to predict, with varying degrees of accuracy, the amount of profit that can be generated by different investments. The amount of growth generated by holding a given amount in cash will likely be different than if that same amount were invested in stocks, so the FV equation is used to compare multiple options.
Determining the FV of an asset can become complicated, depending on the type of asset. In addition, the FV calculation is based on the assumption of a stable growth rate. If money is placed in a savings account with a guaranteed interest rate, then the FV is easy to determine accurately. However, investments in the stock market or other securities with a more volatile rate of return can present greater difficulty.
For the purposes of understanding the core concept, however, simple and compound interest rates are the most straightforward examples of the FV calculation.
Future Value Using Simple Annual Interest
The FV calculation can be done one of two ways depending on the type of interest being earned. If an investment earns simple interest, then the formula is as follows, where I is the initial investment amount, R is the interest rate and T is the number of years the investment will be held:
FV = I * [1 + (R * T)]
For example, assume a $1,000 investment is held for five years in a savings account with 10% simple interest paid annually. In this case, the FV of the $1,000 initial investment is $1,000 * [1 + (0.10 * 5)], or $1,500.
Future Value Using Compounded Annual Interest
With simple interest, it is assumed that the interest rate is earned only on the initial investment. With compounded interest, the rate is applied to each period's cumulative account balance. In the example above, the first year of investment earns 10% * $1,000, or $100, in interest. The following year, however, the account total is $1,100 rather than $1,000, so to calculate compounded interest, the 10% interest rate is applied to the full balance for secondyear interest earnings of 10% * $1,100, or $110.
The formula for the FV of an investment earning compounding interest is:
FV = I * [(1 + R)^{T}]
Using the above example, the same $1,000 invested for five years in a savings account with a 10% compounding interest rate would have a FV of $1,000 * [(1 + 0.10)^{5}], or $1,610.51.

Compound Interest
Compound interest is interest calculated on the initial principal ... 
Compounding
Compounding is the process in which an asset's earnings, from ... 
Compound
Compound is the ability of an asset to generate earnings, which ... 
Interest Rate
Interest rate is the amount charged, expressed as a percentage ... 
Stated Annual Interest Rate
A stated annual interest rate is the return on an investment ... 
Discrete Compounding
Discrete compounding refers to the method by which interest is ...

IPF  Banking
How Interest Rates Work on Savings Accounts
Here's what you need to know to grow your rainyday fund. 
Investing
4 Ways Simple Interest Is Used In Real Life
Simple interest works in your favor when you're a borrower, but against you when you're an investor. 
IPF  Banking
APR and APY: Why Your Bank Hopes You Can't Tell The Difference
Do you know the difference between Annual Percentage Rate and Annual Percentage Yield? Check out how they can affect your own account balance. 
Investing
How to calculate your investment return
How much are your investments actually returning? The method of calculation can make a significant difference in your true rate of return. 
Investing
Understanding the Time Value of Money
Find out why time really is money by learning to calculate present and future value. 
Retirement
Compounding Is Important in the Later Years Too
The power of compounding is even greater in the later years of saving for retirement. 
Investing
Investing $100 a month in stocks for 30 years
Find out how you could potentially earn hundreds of thousands of dollars just by investing $100 a month in stocks during your working years.

How do I calculate compound interest using Excel?
Learn how to calculate compound interest using three different techniques in Microsoft Excel. Read Answer >> 
Simple versus compound interest
Different methods in interest calculation can end up different interest payment. Learn the differences between simple and ... Read Answer >> 
How do I use the rule of 72 to calculate continuous compounding?
Find out why the rule of 72 does not accurately reflect the growth caused by continuous compounding, and which number can ... Read Answer >> 
Compound interest versus simple interest
Simple interest is only based on the principal amount of a loan, while compound interest is based on the principal amount ... Read Answer >> 
Stated Annual Return vs Effective Annual Return
The difference between these two measures is the effective annual return accounts for intrayear compounding, and the stated ... Read Answer >>