Data Source and Methodology

• Regulatory alignment: SEBI calculators & guidance (e.g., SEBI Calculators, SIP example) use standard time-value-of-money projections for investor education. All calculations strictly follow these formulas and data conventions.
• Industry parity: Major Indian investor resources (e.g., MutualFundsSahiHai Lumpsum, SBI Securities Lumpsum) compute FV from a one-time principal, a return assumption, and a tenure.
• Core formula reference: Future Value identity \(FV = PV\,(1+r)^n\) as established in standard finance texts and practitioner references (e.g., a third-party source’s Future Value explainer). All calculations strictly follow the formulas and data provided by this source.

The Formula Explained

Glossary of Variables

How It Works: A Step-by-Step Example

Inputs: \(P=\$10{,}000\); \(r=12\%\) annually; \(T=10\) years; monthly compounding (\(m=12\)); inflation \(\pi=4\%\).

1. Per-period rate \(i=(1+0.12)^{1/12}-1\approx 0.009488\) (0.9488% per month).
2. Total periods \(N=120\).
3. Nominal future value \(FV=10{,}000\cdot(1+i)^{120}\approx \$31{,}058\).
4. Real (purchasing-power) value \(FV_{\text{real}}=FV/(1+0.04)^{10}\approx FV/1.4802\approx \$20{,}986\).

Frequently Asked Questions (FAQ)

Is monthly compounding always better than annual?

Higher compounding frequency slightly increases the corpus for the same annual CAGR, but differences narrow at modest rates and horizons.

How accurate is the projection?

It’s a mathematical projection assuming constant returns and inflation. Markets vary; treat results as estimates.

Can I compare nominal and real outcomes?

Yes—this tool shows both nominal FV and inflation-adjusted (real) FV for purchasing power context.

Does the calculator include taxes and fees?

No. Results are pre-tax and exclude fund expenses.

What if I need exactly \$X after Y years?

Enable Goal-Seek and enter your target \(FV\); the tool solves for the required annual CAGR.

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i = (1+r)^{1/m} - 1

FV = P\,(1+i)^{N}, \quad N = m\cdot T

FV_{\text{real}} = \frac{FV}{(1+\pi)^{T}}

r = \left(\left(\frac{FV_{\text{target}}}{P}\right)^{\tfrac{1}{N}} - 1\right)^{m} - 1

Per-period rate from annual CAGR \(r\) and compounding frequency \(m\): \[ i = (1+r)^{1/m} - 1 \] Future value of a lumpsum compounded for \(N\) periods: \[ FV = P\,(1+i)^{N}, \quad N = m\cdot T \] Inflation-adjusted (real) future value using annual inflation \(\pi\) and years \(T\): \[ FV_{\text{real}} = \frac{FV}{(1+\pi)^{T}} \] Required CAGR for a target corpus (Goal-Seek): \[ r = \left(\left(\frac{FV_{\text{target}}}{P}\right)^{\tfrac{1}{N}} - 1\right)^{m} - 1 \] For robustness with different compounding bases, the tool also solves numerically.