You may have some idea what a future goal will cost, but you may not be sure if you have enough money set aside in savings and investments to comfortably reach that goal. Knowing how close you are to your goals in today's dollars can motivate you to keep investing.

What does all this mean? It means that the present value of your required investment depends on how much you need in the future (future value), what rate you earn i, and the number of times the rate is compounded n. Therefore, to keep the amount you must set aside today to a minimum:

• seek the highest rate available for the amount of risk you can tolerate
• seek the most frequent compounding period
• hold your investments for the long term