Sinking Fund Calculator
A sinking fund is a disciplined way to reach a known future amount by a target date: you make equal deposits at a regular interval, and each deposit earns interest until the goal date. This calculator solves the future-value-of-an-annuity formula for the deposit, telling you how much to set aside each period to hit your goal. It also shows the total you will contribute and how much of the goal comes from interest. Enter your goal amount, the annual interest rate, the number of years, and how many deposits you make per year.
Sinking fund formula
r = annual rate / deposits per year
n = years * deposits per year
deposit = FV * r / ((1 + r)^n - 1)
total deposits = deposit * n
interest earned = FV - total deposits
If the rate is zero, the deposit is simply the goal divided by the number of deposits. This is an ordinary annuity, with deposits at the end of each period.
Sinking fund context
- Sinking funds are common for bond repayment, asset replacement, and large planned costs.
- Higher deposit frequency slightly reduces each payment through more frequent compounding.
- A higher interest rate lowers the deposit needed for the same goal.
- Depositing at the start of each period reduces the required payment a little.
- Interest earned grows as the time horizon lengthens.
Sinking fund: frequently asked questions
What is a sinking fund?
A sinking fund is money set aside regularly to reach a specific future amount by a set date, such as replacing equipment, repaying a bond, or funding a large planned purchase. Each deposit earns interest, so the total grows from both contributions and compounding.
How is the required deposit calculated?
The deposit equals the future value goal times the periodic interest rate, divided by the quantity (1 plus the periodic rate) raised to the number of periods, minus 1. This is the future-value-of-an-annuity formula solved for the payment.
What is the periodic interest rate?
It is the annual rate divided by the number of deposits per year. For a 6 percent annual rate with monthly deposits, the periodic rate is 0.06 divided by 12, which is 0.005 per month. The number of periods is years times deposits per year.
Does this assume deposits at the end of each period?
Yes. This calculator uses an ordinary annuity, where each deposit is made at the end of the period. If you deposit at the start of each period, the same total can be reached with a slightly smaller payment because each deposit earns one extra period of interest.
What does interest earned show?
Interest earned is the future value goal minus the sum of all deposits. It is the portion of the goal funded by compounding rather than by your own contributions.
Official sources
- U.S. Securities and Exchange Commission: Investor.gov.
- U.S. Securities and Exchange Commission: SEC.gov.
Reviewed by the CalculatorHub team, edited by James Graham, 17 June 2026. See our methodology.