What is the role of interest rates in Future Value Calculator calculations?

The interest rate is a key input that significantly impacts the projected future value of an investment calculated by a Future Value Calculator.

Higher interest rates allow your investment to grow faster as the rate of return on your money is higher. Even a small difference of 1-2% in interest rate can hugely impact the future value over long periods due to compounding.

For example, ₹1 lakh invested today at 8% interest becomes ₹4,66,096 in 20 years. But at 10% interest, it becomes ₹6,72,750 lakhs in 20 years.

Therefore, choosing investments that give higher interest rates can make a big difference to your future wealth. This is why equities like stocks and mutual funds are attractive, as they tend to provide inflation-beating returns of 10-12% over the long run.

On the other hand, lower interest rate environments offer slower growth, so the projected future value is less large.