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Sinking Fund Calculator

Calculate the periodic payment required to grow your savings to a target amount.

How it is calculated

A sinking fund is a regular deposit schedule that grows to a target amount. The tool uses the future-value-of-annuity formula solved for the payment: PMT = goal × i / ((1 + i)n − 1), where i = annual rate / 100 / deposits per year and n = years × deposits per year. Deposits are made at the end of each period. If the rate is 0, the payment is just goal / n.

It also shows total deposits (PMT × n), the interest earned (goal − total deposits) and the number of deposits. Goal and years must be above zero; a missing rate counts as 0 and a missing frequency as 12 (monthly). The rate is assumed constant, and taxes, fees and inflation are ignored.

Worked example

You want 50,000 in 5 years, earning 6% a year with monthly deposits. The monthly rate is 0.5% and there are 60 deposits, so (1.005)60 ≈ 1.34885. The payment is 50,000 × 0.005 / 0.34885 = $716.64 a month. Total deposits are $42,998.40, so $7,001.60 of the goal comes from interest.

Try this example →

Common mistakes

  • Entering a monthly rate in the annual rate field. Type 6 for 6% a year, not 0.5.
  • Changing the deposit frequency without thinking about the rate: the tool divides the annual rate by it, so yearly deposits mean one compounding per year.
  • Assuming deposits start immediately. Here each deposit is at the end of its period, so payments made at the start need a slightly smaller amount.
  • Counting on a guaranteed return; if the real rate is lower, the fund will fall short of the goal.

Sources

About this calculator

This calculator works out the regular deposit — the sinking fund payment — needed to reach a savings goal by a target date at a given interest rate, using the formula PMT = FV × r / ((1+r)ⁿ − 1), the mirror image of a standard annuity payment formula.

Companies use sinking funds to set aside money for future bond repayments or equipment replacement, and individuals use the same math to plan regular deposits toward a known future expense like a large purchase or a balloon payment.

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  • Editorial team

    Sinking funds are common for planned, dated costs such as replacing a roof, a company vehicle or a loan balloon. The result is a deposit in future money: if the thing you are saving for gets more expensive each year, enter the price you expect at the end date rather than today's price. A quick sanity check is that total deposits must come out below the goal whenever the rate is above zero. What are you saving toward, and how often do you deposit?

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