Future value
Certified Financial Planner glossary · Certified Financial Planner
Definition
The value of a present amount or series of deposits after compounding for a stated number of periods.
Future value in plain English
Someone invests a lump sum or a series of deposits and wants the ending balance after compounding. Future value is what that money becomes after a stated number of periods at the compounding rate. Inflation-adjusted goals need the real rate, not the nominal rate alone. If the stem asks for purchasing power, adjust for inflation; if it asks for nominal ending wealth, leave inflation out of the rate. Naming which question you are answering prevents a clean but useless FV.
Practice Future value
Related Certified Financial Planner terms
Certified Financial Planner practice questions · Certified Financial Planner flashcards · Certified Financial Planner study guide