Future Corpus Calculator

Planning your financial future is one of the most crucial decisions, you can make to achieve your financial future goal or freedom. So whether you are saving for retirement, your child's education, or another thing to make a big purchase. You want to know how much time it takes to achieve your financial goal. So for this, we have a Future Corpus Calculator to calculate it.

So it’s essential to know how much money you will need and how to build it over time, so this is where a Future Corpus Calculator can help, so here we will discuss what a Future Corpus Calculator is, how it works, and how you can achieve your financial goals by the using of this calculator.

What is the Future Corpus Calculator?

Future Corpus Calculator is a financial tool that helps us to figure out how much funds we will have to save by a certain date in the future. In short, it is used to calculate the periods, that is how much it will take to acquire your desired financial goal or amount (Corpus).

In this calculator, you all need to focus on some factors, that how much money you have currently, how much will you invest each month, or your estimated returns to find the correct period to achieve that financial goal.

So this calculator is very helpful for planning big financial decisions or goals such as retirement planning or planning to save money for education. In simple terms, the Future Corpus calculator can help us estimate the time required to accumulate the specific corpus based on your current savings, per monthly contribution, and the expected return on investment.

Key Inputs 

Here are the keys input in the Future Corpus Calculators:

Current saving: This term refers to the amount of money that you have already saved which acts as the starting point for future growth. For example, if you have INR 1 Lakh to invest in saving then it will be your current saving.

Monthly investment:  Here is the regular amount you plan to invest each month to grow your future corpus, for example, if you are investing 5000 per month then it will be your monthly investment.

Expected Annual Return (%): So this is the annual rate of return that you expect from your investments the return rate depends on your investment choices such as mutual funds, stock, fixed deposit, etc. For example, if you assume that the annual return is 8% which is reasonable for the diversification portfolio.

Desired Future Corpus: Here this amount is a targeted amount that you want to accumulate by the end of your investment periods. For example, if your goal is INR 50 Lakh then this will be your desired future corpus.

Time to reach desired Corpus (years): Here the calculator provides an estimate of how many years it will take to reach your target corpus with the given savings, contribution, and return. For example, if your current saving is INR 1 Lakh, your investment is INR 5000 per month, your annual return is 8%, and your desired future corpus is INR 50 Lakh your time year will be 24 years to reach that goal.

How to Use the Future Corpus Calculator 

Here we will learn how to use the Future Corpus Calculator effectively:

1. First, you need to set clear goals related to your finances, so before using this calculator, first define your financial goals, such as education, retirement, or purchasing a home. Here knowing your target amount will help you to input the correct desired corpus.
2. Now you have to understand your risk tolerance as its expected annual return which will vary based on the types of investment you will choose, so this will be riskier assets like stock which may offer higher returns while safer investments like fixed deposits or bonds which offer lower return but with the less risk.
3. Now you can experiment with the contribution where you can adjust the amount of your monthly investment to see how it will affect the time needed to reach your target, so here increasing your monthly contribution as it can significantly reduce the time required to achieve your corpus.
4. Lastly, you can review and adjust regularly, as over time, you can review your investments and contributions, so if you're nearing your financial goal faster or the market conditions change, you may want to adjust your saving strategy. 

Also, Check - EMI Calculator

Formula 

Here is the formula for the Future Corpus Calculator:

“Fn = Fn-1 + (Fn-1 *r) + P”

Where,

Fn = Future Corpus after the n-th month

Fn-1 = Future Corpus after the (n-1)-th month

r = Monthly return rate (annual return rate R divided by 12)

P = Monthly investment (regular Contributions)

This Formula calculates how your savings or investments grow each month, so the total future corpus for any given month n depends on:

• The previous month's total which is (Fn-1),
• The  return which is earned on that previous total,
• And your additional contributions in that month (P).

Example of  Future Corpus Calculator Formula

For example, let’s assume that there is a scenario where,

• Current savings =  2,00,000 which is an initial lump sum investment.
• Monthly investment = 5,000 which is a regular investment every month.
• Annual return rate (r) = 8% or 0.08 in decimal form.
• Investment period = 6 Months which we will calculate after the 6 months.

Now calculate the monthly return rate, where the annual return is 8%, so the monthly return r rate is:

r = \frac{R}{12} 

= \frac{0.08}{12}

 = 0.006667 or 0.67% per month

Let’s calculate the future corpus for each month, 

1st Month:

F1 = 2,00,000 + (2,00,000 x 0.006667) + 5,000

= 2,00,000 + 1,333.4 + 5,000

= 2,06,333.4

So after the  first month, the future corpus is INR 2,06,333.4

2nd Month: 

F2 = 2,06,333.4 + (2,06,333.4 x 0.006667) + 5,000

= 2,06,333.4 + 1,375.79 + 5,000

= 2,12,709.19

After the second month, the future corpus is INR 2,12,709.19

3rd Month: 

F3 = 2,12,709.19 + (2,12,709.19 x 0.006667) + 5,000

= 2,12,709.19 + 1,418.74 + 5,000

= 2,19,127.93

After the third month, the future corpus is INR 2,19,127.93

4th Month: 

F4 = 2,19,127.93 + (2,19,127.93 x 0.006667) + 5,000

= 2,19,127.93 + 1,460.32 + 5,000

= 2,25,588.25

After the fourth month, the future corpus is INR 2,25,588.25

5th Month: 

F5 = 2,25,588.25 + (2,25,588.25 x 0.006667) + 5,000

= 2,25,588.25 + 1,503.76 + 5,000

= 2,32,092.01

After the fifth month, the future corpus is INR 232092.01

6th Month: 

F6 = 2,32,092.01 + (2,32,092.01 x 0.006667) + 5,000

= 2,32,092.01 + 1,547.68 + 5,000

= 2,38,639.69

After the sixth month, the future corpus is INR 2,38,639.69

Final Result:

So after 6 months of investing INR 5,000 per month, with an 8% annual interest return, the future corpus will be INR 2,38,639.69. So this includes the initial investment, monthly contributions, and the compound return.

Wrapping Up

Future Corpus Calculator helps you to understand that you can estimate how long it will take to accumulate your desired corpus. From now onward you can start your planning of financial future for today with the help of a Future Corpus Calculator which ensures that you stay on track to meet your long-term financial goals.