I'm trying to setup a calculator in google sheets where I calculate the future value of investing for example:
- a principal of 10.000
- into which I deposit 1.000 every month
- the investment doesn't give steady monthly returns but we can know an annualized average of 20% (say stocks or ETFs)
Would it be correct to use the formula:
FV(rate, number_of_periods, payment_amount, [present_value], [end_or_beginning])
FV(20, 12, 1000, -10000)
The main doubt is also: when estimating the compounding of a volatile monthly market, should we consider the interest compounded monthly or yearly, given the example of an annualized 20% return?