The formula below is to calculate the future value out of your current savings being compounded annually.
FV= PV (1 + i )N
There are more complex formulas where your interest is compounded month, daily and so on. However, if you use this formula, it will just underestimate your future value leaving you with an amount a bit larger than expected.
FV is the future value of your money
PV is the present value of your money
i is the interest rate
N is the number of years it is invested
This formula also can be used in many different scenarios such as calculating how much would your future payments be worth today and so on.
In future postings, I would be including some excel worksheets that allows you to calculate it straight off and giving more indepth examples.
Until next time.
