1. What is a Future Value Calculator?

Definition: This calculator estimates the future value of an investment based on principal amount, interest rate, and time period.

Purpose: It helps investors and savers understand how their money can grow over time with compound interest in South African Rand.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( FV \) — Future Value (ZAR)
• \( P \) — Principal Amount (ZAR)
• \( r \) — Interest Rate per period (%)
• \( n \) — Number of periods

Explanation: The principal amount grows exponentially based on the interest rate and compounding periods.

3. Importance of Future Value Calculation

Details: Understanding future value helps with financial planning, retirement savings, and investment decisions in the South African context.

4. Using the Calculator

Tips: Enter the principal amount in ZAR, annual interest rate (%), and number of periods (years). All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between simple and compound interest?
A: Compound interest earns interest on both principal and accumulated interest, while simple interest only earns on principal.

Q2: How often is interest compounded in this calculator?
A: The calculator assumes interest is compounded once per period (annually if periods are in years).

Q3: Can I use this for monthly calculations?
A: Yes, just adjust the rate to monthly (annual rate/12) and periods to months.

Q4: What's a typical interest rate in South Africa?
A: Rates vary, but savings accounts typically offer 3-7%, while investments may yield 8-15% annually.

Q5: Does this account for inflation?
A: No, the result is nominal future value. For real value, subtract expected inflation from the interest rate.