1. What is the Savings Formula?

The future value formula calculates how much an initial amount will grow over time with compound interest. This version assumes no additional deposits are made after the initial investment.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( Initial \) — Starting amount in dollars
• \( r \) — Annual interest rate (as decimal)
• \( t \) — Time in years

Explanation: The formula accounts for compound growth, where interest earns additional interest over time.

3. Importance of Future Value Calculation

Details: Understanding future value helps with financial planning, retirement savings projections, and comparing investment options.

4. Using the Calculator

Tips: Enter initial amount in dollars, rate as decimal (e.g., 0.05 for 5%), and time in years. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between this and a savings calculator with deposits?
A: This calculator only considers the initial amount, while others account for regular contributions.

Q2: How often is interest compounded?
A: This assumes annual compounding. For other periods, the formula would need adjustment.

Q3: Does this account for taxes or fees?
A: No, this calculates gross returns before any deductions.

Q4: What's a realistic rate of return?
A: Historically, stock market averages 7-10% annually, but results vary year-to-year.

Q5: Can I use this for inflation calculations?
A: Yes, use negative rates to model purchasing power erosion over time.