Question

What is the future value of your money

Answer 1

future value is the value of an asset at a specific date. It measures the nominalfuture sum of money that a given sum of money is "worth" at a specified time in thefuture assuming a certain interest rate, or more generally, rate of return; it is the present value multiplied by the accumulation function.

Answer 2

The future value of money by definition is the present value plus the interest earned. It relates to the concept that one dollar today is worth more than one dollar tomorrow because money has the capacity of earning interest.

The difficulty is to determine what interest does money earn. If you just invest your money in a CD, you will know beforehand what interest you are going to earn and can determine the future value of the CD, but if you invest in other type of assets things are not so simple. When you calculate the future value of money you assume that it will have a constant growth rate, or constant interest earned.