Forecasting the Future Value of Your 403 b
Below is a MRR and PLR article in category Finance -> subcategory Other.
Forecasting the Future Value of Your 403(b)
Introduction
Wondering how much your 403(b) retirement account will grow over time? With Microsoft Excel, you can easily forecast its future value using the FV function. Here are some tips shared by author and CPA Stephen L. Nelson to help you get started.
Using the FV Function
The FV (Future Value) function in Excel calculates how much an investment will be worth in the future, based on the interest rate, number of payments, payment amount, and present value. It also allows for an optional annuity type setting.
Function Syntax
```
=FV(rate, nper, pmt, pv, type)
```
Although it might seem complex at first, it's quite manageable. Let’s break it down with an example.
Example Calculation
Imagine you have $10,000 in your 403(b) account. You and your employer contribute $200 monthly, and you want to know how much the account will be worth in 25 years, assuming a 10% annual interest rate.
To find out, enter this formula in Excel:
```
=FV(10%/12, 25*12, -200, -10000, 0)
```
This calculation results in approximately $386,000.
Key Details
- Interest Rate Conversion: The annual 10% interest rate is divided by 12 to convert it to a monthly rate.
- Time Period Conversion: The 25-year period is multiplied by 12 to convert it to months.
- Negative Values: Monthly contributions and initial investment amounts are shown as negative because they are cash outflows. The future value is shown as positive, representing cash inflow.
- Type-of-Annuity: The last parameter, 0, indicates payments occur at the end of the period (ordinary annuity). If you set it to 1, payments are assumed to occur at the start (annuity due).
By using these steps, you can effectively project the future value of your 403(b) and plan your retirement with confidence.
You can find the original non-AI version of this article here: Forecasting the Future Value of Your 403 b .
You can browse and read all the articles for free. If you want to use them and get PLR and MRR rights, you need to buy the pack. Learn more about this pack of over 100 000 MRR and PLR articles.