1. What is the Investment Formula Including Withdrawals?

The investment formula calculates the future value of an investment that includes periodic withdrawals. It accounts for both the initial investment growth and the impact of regular withdrawals on the final value.

2. How Does the Calculator Work?

The calculator uses the investment formula:

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 compounded growth of the initial investment plus the accumulated value of periodic withdrawals, considering the time value of money.

3. Importance of Investment Calculation

Details: Accurate investment calculation is crucial for financial planning, retirement planning, and understanding the long-term impact of withdrawals on investment portfolios.

4. Using the Calculator

Tips: Enter initial amount in currency units, rate per period as decimal (e.g., 0.05 for 5%), number of periods, and withdrawal amount as negative value. All values must be valid.

5. Frequently Asked Questions (FAQ)

Q1: Why is the withdrawal amount entered as negative?
A: The negative sign indicates cash outflow (withdrawal) from the investment, which reduces the future value.

Q2: What time periods can be used?
A: The formula works for any consistent time period (months, quarters, years) as long as the rate matches the period.

Q3: How does the rate affect the calculation?
A: Higher rates increase investment growth but also increase the opportunity cost of withdrawals.

Q4: Can this formula handle both deposits and withdrawals?
A: Yes, use positive values for deposits and negative values for withdrawals in the PMT field.

Q5: What are the limitations of this formula?
A: Assumes constant rate and periodic withdrawals. Doesn't account for taxes, fees, or variable rates.