Sinking Fund Calculator — Regular Savings to a Target
Work out the equal periodic deposit needed to save a specific lump sum by a target date, factoring in the compound interest earned on each deposit along the way.
%
years
Payment frequency
Equal deposit needed each period to hit your target
- 1
Periodic interest rate
5 % ÷ 100 ÷ 12 = 0.004167 - 2
Total periods
10 × 12 = 120 - 3
Growth factor
(1 + 0.004167)ⁿ = 1.647How much one unit grows over the whole term at the periodic rate. - 4
Payment per period
50,000 × 0.004167 ÷ (1.647 − 1) = 321.99
How does this calculator work?
A sinking fund grows regular equal deposits at compound interest to a target lump sum. The required deposit each period is PMT = FV × r / ((1+r)^n − 1), where r is the periodic rate and n is the number of periods. The difference between FV and your total deposits is the interest the fund earns.
Formula
How this is calculated
A sinking fund is an account into which equal, regular deposits are made so that — combined with compound interest — the balance reaches a predetermined target (FV) by a set date. The formula PMT = FV × r / ((1+r)^n − 1) inverts the future-value-of-an-ordinary-annuity formula to solve for the required payment (PMT). Here r is the interest rate per period (annual rate ÷ periods per year) and n is the total number of payment periods.
For example, to accumulate $50,000 in 10 years at 5% per year compounded monthly, r = 0.05/12 ≈ 0.004167 and n = 120, giving a required monthly deposit of about $322 — less than the $417 required with zero interest, the difference being the interest the fund earns on itself. More frequent deposits are slightly better because each payment starts compounding sooner.
This calculator assumes end-of-period payments (ordinary annuity), a constant rate over the full term, and no fees or tax on interest. Real accounts may vary; applying the rate net of any withholding tax gives a more accurate target payment. When the interest rate is zero, the formula reduces to PMT = FV / n.
Frequently asked questions
Businesses use sinking funds to set aside money to repay bonds or replace major assets (machinery, fleet vehicles, a roof). Individuals use them for large planned expenses — a house deposit, car purchase, school fees, or any lump-sum goal that benefits from disciplined regular saving.
A sinking fund works backwards from a specific target: the formula tells you exactly what periodic payment is required. Standard compound-interest saving works forward: you put in a fixed amount and calculate the eventual balance. Both use the same underlying math — just different unknowns.
Missing a payment means the fund will fall short of the target if no correction is made. You can recalculate with the remaining term and the current balance as a head start — effectively a new sinking fund for the remaining gap.
Also known as
TG we-Calculate Editorial Team. (2026). Sinking Fund Calculator — Regular Savings to a Target [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/sinking-fund-calculator
TG we-Calculate Editorial Team. "Sinking Fund Calculator — Regular Savings to a Target." TG we-Calculate. 2026. https://we-calculate.com/calculator/sinking-fund-calculator.
TG we-Calculate Editorial Team, "Sinking Fund Calculator — Regular Savings to a Target," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/sinking-fund-calculator
@misc{wecalculate_sinking_fund_calculator, title = {Sinking Fund Calculator — Regular Savings to a Target}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/sinking-fund-calculator}}, year = {2026}, note = {TG we-Calculate} }
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