Formula for calculating future value of my investments
I'm new to investing and want to know, how to calculate a future value of my investments. Let's see an example:
I can buy every year SPY ETFs for 10k for 10 years from now
What will be the FV of my investments if the SPY's performance for 10 years will be exactly like it was the last 10 years:
* Image source: www.etf.com/SPY#overview
What I'm struggling with, is what percent should I add to rate parameter inside FV formula. Is it 7.72% or something else?
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Since the 10 year annualised performance figure is calculated from the largest sample there is some reason to use that as your return. However, that time range includes an unusual market condition, the recovery from the 2008 crash. The three year range would be more reflective of current market conditions and would be a more sensible choice.
=FV(0.1135,10,10000,0,1)
189366.95
d = 10000
n = 10
r = 0.1135
fv = (d (1 + r) ((1 + r)^n - 1))/r = 189366.95
Nevertheless, since you write, "if the SPY's performance for 10 years will be exactly like it was the last 10 years", then you are basically saying you should use the 10 year annualised figure: 14.34%
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