Investment Calc With Withdrawals

Investment With Withdrawals Formula:

\[ FV = P \times (1 + r)^k + PMT \times \frac{(1 + r)^k - 1}{r} \]

Initial Amount (P):

currency units

Rate Per Period (r):

decimal

Number of Periods (k):

unitless

Withdrawal Amount Per Period (PMT):

currency units

Future Value (FV):

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1. What Is The Investment With Withdrawals Formula?

The investment with withdrawals formula calculates the future value of an investment that includes regular withdrawals. It's useful for retirement planning, annuities, and other investment scenarios where periodic withdrawals are made.

2. How Does The Calculator Work?

The calculator uses the formula:

\[ FV = P \times (1 + r)^k + PMT \times \frac{(1 + r)^k - 1}{r} \]

Where:

\( FV \) — Future value (currency units)
\( P \) — Initial amount (currency units)
\( r \) — Rate per period (decimal)
\( k \) — Number of periods (unitless)
\( PMT \) — Withdrawal amount per period (currency units, negative)

Explanation: The formula calculates the future value of an investment considering both the initial amount's growth and the impact of regular withdrawals.

3. Importance Of Future Value Calculation

Details: Calculating future value with withdrawals helps investors plan for retirement, understand the long-term impact of regular withdrawals, and make informed decisions about investment strategies.

4. Using The Calculator

Tips: Enter the initial investment amount, rate per period (as a decimal), number of periods, and withdrawal amount (use negative values for withdrawals). All values must be valid.

5. Frequently Asked Questions (FAQ)

Q1: What if I want to make deposits instead of withdrawals?
A: Use positive values for PMT to calculate future value with regular deposits.

Q2: How do I convert annual rate to periodic rate?
A: Divide the annual rate by the number of periods per year. For monthly calculations, divide annual rate by 12.

Q3: What time periods can this calculator handle?
A: The calculator works with any consistent time period (months, quarters, years) as long as all inputs use the same period.

Q4: Are there limitations to this formula?
A: The formula assumes a constant interest rate and regular, equal withdrawals. It may not accurately represent variable-rate scenarios.

Q5: Can this be used for loan calculations?
A: Yes, with appropriate adjustments. For loans, P would represent the principal, and PMT would represent regular payments.