Annuity Calculator
An annuity is a series of equal payments made at regular intervals — think monthly savings contributions, insurance premiums, or loan repayments. The power of an annuity lies in compound interest: each contribution earns interest, and that interest itself earns interest until the end of the term.
This calculator finds the future value of an annuity combined with an initial lump sum. You enter the monthly contribution, starting amount, expected rate and number of years, and it returns the total value at the end — split between what came from the contributions (annuity) and what came from the initial capital (lump sum).
Under an illustrative assumption: contributing 5.000.000 VND/month on a 100.000.000 VND base at 8%/year for 20 years, you would have 3.437.782.355 VND — of which 2.945.102.078 VND came from the contributions and 492.680.277 VND from the initial amount. Your actual contributions total 1.300.000.000 VND; the remaining 2.137.782.355 VND is compound interest. At 0%, you would have only 1.300.000.000 VND — exactly what you put in.
Future value of an annuity — the formulas
Ordinary annuity (payments at end of each period)
FV = PMT × [(1 + r)^n − 1] / r
| Symbol | Meaning |
|---|---|
| PMT | Monthly contribution (5.000.000 VND) |
| r | Monthly rate = 8% ÷ 12 ÷ 100 = 0.6667%/month |
| n | Total months (20 × 12 = 240) |
| FV | Future value of the contribution stream (2.945.102.078 VND) |
Initial lump sum
FV = PV × (1 + r)^n
PV = 100.000.000 VND → after 20 years: 492.680.277 VND.
Total value
Total = FV(annuity) + FV(lump sum) = 3.437.782.355 VND
Comparison: a shorter term
Contributing for just 10 years instead of 20 drops the total from 3.437.782.355 to 1.136.694.199 VND. The 2.301.088.156 VND gap shows how time drives compound growth — each extra year adds not just 12 more contributions, but 12 more months of interest earning interest on top of interest.
Model limitations
The tool assumes a constant rate, equal monthly contributions, and monthly compounding. Real rates fluctuate and you may skip or add extra months — treat the output as a theoretical scenario.
Worked example: 5.000.000/month, 100.000.000 base, 8%/year, 20 years
Illustrative assumptions: a fixed 8%/year rate, monthly contributions, monthly compounding.
| Metric | Value |
|---|---|
| Initial amount | 100.000.000 VND |
| Monthly contribution | 5.000.000 VND |
| Number of months | 240 |
| Total contributed | 1.300.000.000 VND |
| FV from contributions | 2.945.102.078 VND |
| FV from initial amount | 492.680.277 VND |
| Total value | 3.437.782.355 VND |
| Compound interest earned | 2.137.782.355 VND |
| Interest / contributions | 164% |
0% vs 8%: the power of compounding
At 0% you would receive exactly 1.300.000.000 VND — equal to what you put in. At 8%/year, you receive 3.437.782.355 VND — an extra 2.137.782.355 VND entirely from compound interest. That is why starting early matters more than contributing more.
Frequently asked questions
What is an annuity?
An annuity is a series of equal payments made at regular intervals — for example, contributing 5.000.000 VND every month for 20 years. Its future value depends on the rate and time: at 8%/year (illustrative), the contribution stream grows to 2.945.102.078 VND; combined with the 100.000.000 VND initial amount growing to 492.680.277 VND, the total is 3.437.782.355 VND.
How does compound interest affect an annuity?
Compound interest means interest earns interest: each month the contributions earn interest, and the next month that interest earns more interest. With 5.000.000/month at 8%/year for 20 years: you contribute 1.300.000.000 VND but receive 3.437.782.355 VND — the 2.137.782.355 VND gap is compound interest. At 0%, you would receive exactly 1.300.000.000 VND.
How long until the value doubles the contributions?
It depends on the rate. At 8%/year (illustrative), after 20 years the total of 3.437.782.355 VND is 2.6× the 1.300.000.000 VND contributed. The Rule of 72 estimates that a lump sum doubles in about 72 ÷ 8 = 9 years. An annuity is more complex because each contribution has a different compounding period.
Is monthly or annual contribution better?
Monthly contributions usually produce a better result because money enters the system sooner and has more time to compound. This calculator assumes monthly contributions. If you contributed annually (e.g. 60.000.000 VND once a year), the result would be slightly lower because the lump annual payment misses 11 months of compounding that the monthly approach captures.
How is an annuity different from a lump-sum investment?
A lump-sum investment puts all the money in at once and lets compound interest work. An annuity contributes equal amounts periodically — suited to people with monthly income who want to build wealth gradually. This calculator shows both: the FV from the contribution stream (annuity) and the FV from the initial capital (lump sum), so you can see how much each part adds.
Does the calculator account for inflation?
No. The 3.437.782.355 VND result is a nominal value — it does not subtract inflation. At an assumed 4%/year inflation, the purchasing power of 3.437.782.355 VND after 20 years is roughly 1.568.958.991 VND in today's money. Use FiMo's Real Return calculator to adjust for inflation.