Future value refers to the value of a current asset at a future date based on an assumed rate of growth. It is a key concept in finance that draws from the time value of money, which means that a dollar today is worth relatively more than a dollar in the future. Future value calculations allow investors to predict, with varying degrees of accuracy, the amount of profit that can be generated by different investments. The future value equation is used to compare multiple investment options, as the amount of growth generated by holding a given amount in cash will likely be different than if that same amount were invested in stocks.

Future value is used for planning purposes to see what an investment, cash flow, or expense may be in the future. Investors use future value to determine whether or not to embark on an investment given its future value. Future value can also be used to determine risk, see what a given expense will grow at if interest is charged, or be used as a savings target to understand whether enough money will be reserved given the current pace of savings and expected rate of return.

The concept of future value is often closely tied to the concept of present value. Whereas future value calculations attempt to figure out the value of something in the future, present value attempts to figure out what something in the future will be worth today.