If youve got Microsoft Excel (or just about any other popular spreadsheet program) running on your computer, you can use its FV function to forecast the future value of your 401(k) account.
The FV function calculates the future value of an investment given its interest rate,
the number of payments, the payment, the present value of the investment, and,
optionally, the type-of-annuity switch. (More about the type-of-annuity switch a little later.)
The function uses the following syntax:
=FV(rate,nper,pmt,pv,type)
This little pretty complicated, I grant you. But suppose you want to calculate the future value of a 401(k) account thats already got $10,000 in it and to which youre contributing $200-a-month. Further suppose that you want to know the account balanceits future valuein 25 years and that you expect to earn 10% annual interest.
To calculate the future value of the 401(k) account in this case using the FV function, you enter the following into a worksheet cell:
=FV(10%/12,25*12,-200,-10000,0)
The function returns the value 385936.13roughly $386,000 dollars.
A handful of things to note: To convert the 10%...
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