This video is a complete tutorial for calculating compound interest in Excel. This Excel tutorial shows all of the formulas including the FV function to calculate future values, costs and net value so you can quickly and easily project earnings on almost any investment.
The calculations take into account both an initial investment ($1,000) and a recurring investment ($100/month). The interest rate used is the average stock market return for the S&P 500 over the past 100 or so years (10%). We also discuss the last 10 years returns (13.6% from 2010 - 2020) and so much more.
If you recreate what we do in the video you can quickly and easily project returns on any investment amount, recurring investments or lack thereof and compare them back and forth to see what you need to be investing for retirement, future purchases (a house, a car, a plane, boat, etc...) and you can also test the wisdom of current purchase ideas - would this money be better invested at 10% or should I get that new car or boat?
Compound interest is an amazing concept that magnifies savings over time. This is an easy and accurate way to project future values of investments in Excel in literally just a few minutes. I went back through and placed all of the formulas in larger blue callouts so that it is easy to get each of the formulas. I also give a thorough explanation for each formula and piece and why we use static and non-static values and when (also known as relative, absolute and mixed cell references - think $ and not).
Understanding compound interest is essential to generating wealth and having a better life. I hope you take the time to recreate the formulas, charts and graphs in this video and start using them to apply potential investments and large purchases and start thinking them through as to which is a better investment or wiser decision in the long run.
Thanks again for watching this Excel video on calculating compound interest and future value with the FV function and more!
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