Legal Definitions - future value

Definition: Future value is the value of a sum of money or a series of payments at a specific interest rate at some point in the future.

For example, if you invest $100 today at an interest rate of 5%, the future value of that investment after one year would be $105.25. This means that if you leave the $100 invested for one year, it will be worth $105.25 at the end of the year.

Another example is if you make monthly payments of $100 into a savings account that earns 3% interest per year. After 5 years, the future value of your payments would be $6,116. This means that if you continue to make monthly payments of $100 for 5 years, you will have $6,116 in your savings account at the end of the 5 years.

Future value is important in financial planning because it helps you understand how much your money will be worth in the future and how much you need to save or invest to reach your financial goals.