Definition
What a sum of money will grow to by a future date at an assumed rate of return. It is the compound interest question asked forward: present amount, rate, and time in, ending amount out.
Why it matters
Future value turns vague saving into arithmetic: it shows what today's dollars become, and how heavily the answer depends on time. It is the math behind every retirement projection and the reason starting ten years earlier beats contributing more later.
Example
$10,000 invested at 7% grows to about $19,700 in 10 years and about $38,700 in 20. Waiting a decade to start does not cost $10,000, it costs the $19,000 gap between those two numbers.
Put it into practice
Related terms
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