Annuity: Future Value of Regular Savings

The Future Value Annuity Calculator projects the future value of a series of equal, periodic payments made over a set time—a financial concept known as an annuity. This is the fundamental calculation used for recurring contributions into retirement funds, college savings plans, or endowments. It helps you visualize how even modest, consistent savings, combined with a steady rate of return, can grow into a substantial final corpus.

While this tool focuses on regular contributions, you might also want to compare this with a single lump sum investment using our Future Value (FV) Calculator, or explore specific retirement accounts using the IRA Future Value Calculator.

The Future Value (FV) of Annuity Formula

This tool calculates the Future Value assuming payments are made at the beginning of each period (known as an Annuity Due). This is common for savings plans where you invest money at the start of the month.

Where:

• PMT = Regular Payment Amount
• FV = Future Value (Maturity Amount)
• i = Periodic Interest Rate (Annual Rate / Frequency)
• n = Total Number of Payments (Years × Frequency)

Frequency, Compounding, and Time Horizon (FAQ)

How does payment frequency affect the outcome?

If you pay more frequently (e.g., Monthly vs. Annually), your money enters the compounding cycle sooner. This generally leads to higher total interest earned compared to making a single large payment at the end of the year. This early compounding effect is key to maximizing returns in exponential growth scenarios.

Why is the Investment Term (Years) so crucial?

The time period is the single most important factor. The longer your money stays invested, the more periods it has to compound, leading to exponential growth. This phenomenon is often called the ‘snowball effect’ of compounding interest, where interest begins to earn interest on itself. Small contributions made early in life can significantly outperform larger contributions made later.