Investment Calculator With Monthly Withdrawal

Investment 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 (negative)

Future Value (FV):

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1. What is the Investment With Monthly Withdrawal Formula?

The investment formula with monthly withdrawal calculates the future value of an investment that includes regular withdrawals. It accounts for both the initial investment amount and periodic withdrawals while considering compound interest over time.

2. How Does the Calculator Work?

The calculator uses the investment 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 compounded growth of the initial investment while accounting for regular withdrawals that affect the final future value.

3. Importance of Investment Calculation

Details: Accurate investment calculation is crucial for financial planning, retirement planning, and understanding how regular withdrawals impact long-term investment growth and sustainability.

4. Using the Calculator

Tips: Enter initial amount in currency units, rate per period as decimal, number of periods, and withdrawal amount as negative value. All values must be valid (initial amount ≥ 0, rate ≥ 0, periods > 0).

5. Frequently Asked Questions (FAQ)

Q1: Why is the withdrawal amount entered as negative?
A: The negative sign indicates that money is being withdrawn from the investment rather than deposited, which affects the future value calculation.

Q2: What time periods can be used with this calculator?
A: The calculator works with any consistent time period (months, quarters, years) as long as the rate corresponds to that period.

Q3: Can this calculator handle irregular withdrawals?
A: No, this calculator assumes consistent, regular withdrawals of the same amount each period.

Q4: What if the withdrawal rate exceeds the investment growth?
A: The calculator will show a decreasing future value, indicating the investment may not be sustainable long-term.

Q5: Is this suitable for retirement planning?
A: Yes, this calculator is particularly useful for retirement planning where regular withdrawals are made from retirement savings.