Calculate the Accumulated Value of Periodic Deposits

What is the formula to calculate the accumulated value of periodic deposits?

How can we determine the accumulated value of money invested with periodic deposits?

Formula to Calculate Accumulated Value of Periodic Deposits

The formula to calculate the accumulated value of periodic deposits is:

Future Value = Payment * ((1 + Interest Rate)^n - 1) / Interest Rate

Investing money in an investment fund and making periodic deposits can result in the accumulation of a significant sum over time. Knowing how to calculate the accumulated value of these periodic deposits can help investors make informed decisions about their investments.

The formula for the future value of an ordinary annuity involves the amount of each periodic deposit, the interest rate, and the number of compounding periods. By plugging these values into the formula, investors can determine the total accumulated value of their investments over a certain period.

For example, let's say an investor makes periodic deposits of $4,000 at the beginning of every six months into an investment fund with an interest rate of 3.25% compounded semi-annually for 5 years. Using the formula mentioned earlier:

Future Value = $4,000 * ((1 + 0.0325)^10 - 1) / 0.0325

After calculations, the accumulated value of periodic deposits after 5 years is approximately $44,018.29. This means that the investor would have accumulated over $44,000 by making regular deposits and taking advantage of compound interest.

Understanding how to calculate the accumulated value of periodic deposits can help investors set financial goals, plan for the future, and make informed decisions about their investments.