How the future value adds up
Each monthly payment is invested and earns a fixed return until the end of the term. Payments made early have more time to compound, so they contribute more to the final value than later payments — even though every payment is the same size.
This calculator models an ordinary annuity, meaning each payment arrives at the end of the month. The future value is the sum of every payment grown forward, and the interest earned is whatever exceeds the total you paid in.
Reading the results
Future value is the projected balance at the end of the term. Total paid is simply your monthly payment multiplied by the number of months, and interest earned is the growth on top.
The donut compares the money you contributed against the interest the annuity generated, while the line chart shows the accumulated value pulling ahead of your cumulative payments over time.
Things to consider
A few points worth weighing before relying on an annuity projection:
- A higher rate or a longer term sharply increases the future value because compounding has more to work with.
- Payments at the start of each month (an annuity due) earn one extra month of growth each, lifting the total slightly.
- Inflation reduces what the final balance can buy, so nominal growth overstates real gains.
Caveats
The model assumes a constant rate and uninterrupted payments. Real annuity products carry fees, surrender charges, and tax rules that this simple future-value calculation does not capture. Use it to understand the math, then read the actual contract terms.
Formula
r = annualRate/100/12; n = years×12; fv = PMT·(((1+r)ⁿ − 1)/r)Frequently asked questions
- When are payments made?
- At the end of each month (an ordinary annuity). Payments at the start of the period would earn one extra month of growth each.