Most people invest because they want to grow their money, but have very little idea if they’re investing enough.

They just invest and invest, hoping that they’ll reach their financial goals in the future.

Take my friend Charles, for example. Last year, he invested P300,000 in a Balanced Fund, and has been regularly investing an additional P10,000 every month to the same UITF so he can do cost averaging.

I asked him what the money is going to used for, and he said that he’ll use it to buy a condominium in the year 2020.

Which now begs the question…

Given that he continues to invest P10,000 every month until 2019, how much will be the total value of his investment by the beginning of 2020?

Assuming by that time, the condominium he wants is worth P2 million, will Charles have enough money to buy it?

Tough to answer, right?

Fortunately, there are financial calculators that can help us. And below is one of them, which computes for the potential future value of an investment.

Go ahead and input some values to see how it works.

Let’s now see if Charles will be able to achieve his financial goal…

His Initial Investment is P300,000. Meanwhile, his Additional Yearly Investment is P120,000 (P10,000 x 12 months). These two are easy enough to know.

Next is the Interest Rate, how much should be its value?

Based on personal observation, these are the typical compounded annual growth rates of investments:

- Low-Risk Investments: 1% to 4%
- Moderate-Risk Investments: 4% to 12%
- High-Risk Investments: 12% to 18%

Since a Balanced Fund is a Moderate-Risk Investment, we can use any number between 4% and 12% for the Interest Rate. Let’s use the median, which is 8%.

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Please note that for Moderate and High-Risk Investments, if the number of years invested is less than 3 years and 5 years respectively, then this range may not hold true because of market volatility.

Fortunately, Charles will be invested for a total of 6 years because he started in 2013 and will invest until 2019.

So here are the numbers that we should input in the calculator:

- Initial Investment: 300,000
- Additional Yearly Investment: 120,000
- Interest Rate: 8
- Years Invested: 6

Using the **Investment Calculator**, you’ll see that Charles will have P1,356,374 after 6 years, which won’t be enough (sorry, my friend).

And even if we use the optimistic value of 12% (which results to P1,565,969) – it will still be not enough to buy a P2M condominium.

What can Charles do now?

One solution here is that, he can use the P1.3M (or whatever is the future value of his investment) as downpayment for the condo unit, and then take out a bank loan. He can ask for a term that will result to a monthly payment of around P10,000.

If he can afford to invest P10,000 every month for 6 years, then chances are, he can afford to pay P10,000 monthly mortgage, correct? (I’m confident that he can)

I hope that the Investment Calculator above can now also help you plan for your financial goals better. Input your own investment numbers there and see what the future value of yours will be.

Lastly, if you’d like to use and embed the calculator on your site, then simply copy the code below and **paste it exactly as it appears**.

<script src="http://fitzvillafuerte.com/calculator/investment-calculator.js" type="text/javascript"></script><span style="font-size:85%;"><a href="http://fitzvillafuerte.com/much-investment-worth-future-heres-calculator.html">Click here to put this Calculator on your site.</a></span>

To float the calculator on the right side of your website, then use the code below:

<div style="float:right;margin:0 0 8px 8px"><script src="http://fitzvillafuerte.com/calculator/investment-calculator.js" type="text/javascript"></script><span style="font-size:85%;"><a href="http://fitzvillafuerte.com/much-investment-worth-future-heres-calculator.html">Click here to put this Calculator on your site.</a></span></div>

Alternatively, you can replace “float:right” with “float:left” in the code above if you want to float the calculator towards the left side.

Do you want something as cool? Then check out The Million Pesos Calculator

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Tags: Calculator, financial calculator, financial goals, future value, Investing

hi,

does the same calculator work with investments of any currency? Thanks!

Hi angelica, yes the calculator works with investments in any currency. But you would have to input the right interest rate. US dollar mutual funds for example, would have a different historical average interest.

Hey Fitz, will this also work with let’s say, if I invest in stocks with COL?

Hi BJ. Yes it will work in estimating the growth of your stock portfolio. Just use the interest rates for high-risk investments.

Hi sir , thank you for this informative article of yours it helps a lot to educate ourselves when it comes to investing esp those newbies like me who wants to explore into the world of stock market. Anyways,im an OFW and so far I got 1M in the bank and thinking of putting into IMA for about 15 to 25 years as I plan to be my retirement fund. Also I want to apply for bdo eip (equity) 20k/mo for 5 years and leave there for 10 to 15 years as fund for my children education in college..In your own opinion sir, do you think its the best idea to put my money on IMA? Could you please elaborate more about IMA and what makes it different from other uitf? I just inform myself tru reading banks infos but I have no idea how does IMA actually works…thank you in advance sir.

Hi Fitz. I have a suggestion to improve the investment calculator. Personally, I do not add a fixed amount to an initial investment. Rather, I add by percentage. For example, instead of adding P10,000 per month, I add 10% of my current salary. So as my salary increases every year, the amount I add to my investment also increases. I also think that most people also increase the amount added at some point in time rather than sticking to a fixed amount, especially if the fund is to be used for retirement (or anything very long term).

Hi mergine, sorry I’m not familiar with IMA as it is an investment fund based abroad. Ask for their prospectus and historical performance to see if it’s a stable investment. But from what I’ve read, it works exactly like a UITF.

Hi Ysera, that is indeed an alternative scenario. I will look into that and see how I can tweak the calculator and add that feature. Thanks.

Hiya, just to clarify im talking about IMA phil offered in BANKS like bdo, bpi , pnb? Any idea about this sir.? Thanks

Hello Sir Fritz, can you include the effect of inflation in the future value of the invested money. Put a field in the calculator that the person can input the inflation figure (say 4%-7%).

Hello Fitz,do you a calculator same as this but the yearly additional is not uniform or fixed. say yr 2 P25T, year 3 P50T yr 4 P30T and so on. Thanks

Hi Reynato. I had a friend code the calculator for me so I don’t know how to do the calculator that you need. In any case, I believe the easiest way to do that is to just use Excel or any spreadsheet. ๐

Thanks sir for this useful tool