Future Value: What Your Money Could Become
Future value calculations illustrate how a starting amount may change under an assumed growth rate.
How the math works
Future value projects a present amount forward using a compounding growth rate: multiply the starting amount by (1 + rate) raised to the number of periods. It answers 'what could this become', which is different from 'what will this become' — the rate is an assumption, not a promise.
Worked example
$15,000 today at an assumed 6% annual return becomes about $26,838 in 10 years, or $48,054 in 20 years. Drop the assumed rate to 4% and the 20-year figure falls to about $32,864 — the rate assumption swings the outcome far more than most people expect.
What to watch for
- Small changes in the assumed rate compound into large differences over long time horizons
- Future value calculations typically ignore taxes and fees, which reduce the real amount realized
- A future value projection is a single scenario among many possible outcomes, not a guaranteed destination
Practical takeaway
Run the future value calculation at two or three different rate assumptions (conservative, moderate, optimistic) rather than relying on a single projected number.