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Future Value Formula:
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The Monthly Investment Calculator calculates the future value of regular monthly investments using the future value of an annuity formula. It helps investors project the growth of their systematic investment plans over time.
The calculator uses the future value of annuity formula:
Where:
Explanation: This formula calculates the compounded growth of regular monthly investments, accounting for interest earned on both principal and accumulated interest.
Details: Understanding future value helps in financial planning, retirement planning, and setting realistic investment goals. It demonstrates the power of compound interest over time.
Tips: Enter monthly investment amount in dollars, monthly interest rate as a percentage, and investment period in months. All values must be positive numbers.
Q1: What is the difference between annual and monthly compounding?
A: Monthly compounding results in slightly higher returns due to more frequent interest calculations and compounding periods throughout the year.
Q2: Can I use this for different compounding frequencies?
A: This calculator is specifically designed for monthly investments and monthly compounding. For other frequencies, different formulas apply.
Q3: Does this account for inflation?
A: No, this calculation provides nominal future value. For real returns, subtract expected inflation from the interest rate.
Q4: What if I want to calculate annual investments?
A: For annual investments, use annual interest rate and number of years instead of months in the calculation.
Q5: Are investment returns guaranteed?
A: No, this calculator provides projections based on fixed returns. Actual investment returns may vary due to market fluctuations.