FV Function in Excel: Future Value of Savings

The FV function in Excel tells you what your savings will be worth in the future, given a fixed interest rate. It handles regular deposits, a starting lump sum, or both, and it compounds the interest for you. This guide walks through each argument with a savings plan you can rebuild, explains why the deposits need a minus sign, and shows how to round the answer.

What does the FV function do?#

FV returns the future value: the balance at the end of a number of periods, including all the interest earned along the way.

=FV(rate, nper, pmt, [pv], [type])

FV works in every version of Excel. It assumes the rate and the deposit stay the same for every period.

How to calculate the future value of monthly savings#

Set up the inputs in cells and point FV at them:

Then in B6, type:

=FV(B2/12,B3*12,-B1)

The result is about 31,056.46. You paid in 200 × 120 = 24,000, so about 7,056 is interest. B2/12 turns the yearly rate into a monthly one, and B3*12 turns years into months. The rate and the number of periods must always use the same unit.

Why the deposit needs a minus sign#

FV follows the same cash-flow rule as PMT: money leaving you is negative, money coming back is positive. A deposit leaves your pocket, so enter it as -200. The balance at the end comes back to you, so FV returns a positive number.

If you type =FV(B2/12,B3*12,B1) with a positive deposit, the result is -31,056.46. The size is right; only the sign is flipped. Either make the deposit negative or put a minus in front of FV, and use the same style across the sheet.

How to add a starting balance (lump sum)#

Put the money you already have in pv, also as a negative number.

The first and third rows show how compounding frequency matters. Monthly compounding adds interest to the balance 12 times a year, so the same 5% grows a little faster than yearly compounding. The compound interest formula guide shows the same calculation written out with the ^ operator.

Deposits at the start of the month: the type argument#

Set type to 1 if you pay in at the start of each period. Each deposit then earns interest for one extra month.

=FV(5%/12,120,-200,0,1)

This returns about 31,185.86, around 129 more than the end-of-month version. Small, but it's the kind of detail an interviewer may ask about. Leave type out, or use 0, when deposits happen at the end of the period, which is the usual case for salary-day saving.

How to round FV to the cent#

FV returns many decimal places. Wrap it in ROUND with 2 digits to get a figure in whole cents:

=ROUND(FV(B2/12,B3*12,-B1,-B4),2)

With a 5,000 starting amount in B4, this returns 39,291.50. Formatting the cell to 2 decimals only changes the display. ROUND changes the stored value, so later totals match what you show. See the ROUND function guide for the syntax and the article on ROUND, ROUNDUP and ROUNDDOWN for when to round up or down.

How to show the balance year by year#

FV can fill a whole table, one row per year, so you can see the savings grow. Put the years 1 to 10 in A9:A18, then in B9 type:

=FV($B$2/12,A9*12,-$B$1,-$B$4)

Fill it down to B18 (Windows: Ctrl+D; Mac: ⌘D). The dollar signs lock the rate, deposit and starting amount, while A9 moves down to A10, A11 and so on. With no starting amount, year 1 shows about 2,455.77 and year 10 shows the full 31,056.46.

A table like this is easy to turn into a line chart, and it makes the effect of compounding visible: the yearly gain gets bigger every year, even though the deposit stays the same. That growing gap is the interest earning interest.

Common FV mistakes#

Most wrong FV results come from units or signs:

1. Yearly rate with monthly deposits. Divide the rate by 12 when you save monthly.
2. Years in nper. Ten years of monthly deposits is 120 periods, not 10.
3. Rate typed as 5 instead of 5%. Excel reads 5 as 500% a period.
4. Positive deposit. The result turns negative. Use -200.
5. Changing rates. FV assumes one fixed rate. For a rate that changes each year, build a year-by-year table instead.

To plan the other way round, "how much do I need to save each month to reach 10,000?", use PMT with the target in fv. For simple one-step growth, such as adding 3% to a price, increase a number by a percentage is all you need. To split a final balance into whole thousands and the remainder, MOD and INT help.

Practise it#

FV questions test whether you can match units and keep signs straight. Start with the rounding step: practise ROUND, ROUNDUP and ROUNDDOWN in a live spreadsheet, where you type the formula and it checks it instantly. Then try the exercise on this page to build a full savings plan in one cell.