Sinking Fund Calculator
This sinking fund calculator works out how much to set aside each period to reach a target amount by a set date. Enter the target, the years until you need it, the interest rate, and how often you pay in, and the sinking fund calculator returns the payment, the total you contribute, and the interest the fund earns along the way.
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What the sinking fund calculator does
A sinking fund is money set aside in regular payments for a known future cost: replacing equipment, repaying a bond, a roof repair, or a car. Because the payments earn interest, you pay in less than the target. The sinking fund calculator solves the future value of an annuity for the payment, after allowing for anything you have already saved.
Sinking fund formula
The fund is an ordinary annuity: equal payments at the end of each period that earn interest:
Solving for the payment gives the sinking fund payment. The term i ÷ [(1 + i)n − 1] is called the sinking fund factor. Money already saved grows on its own, PV × (1 + i)n, and reduces what the payments must cover.
Sinking fund calculator example
You need 50,000 in 5 years and can earn 4% a year, paying in monthly:
You pay in 45,249.57 and interest adds 4,750.43. With 10,000 already saved, the payment drops to 569.99 a month.
How to use the sinking fund calculator
Enter the target amount and the number of years until you need it. Add the yearly interest rate the savings earn and choose monthly, quarterly, or yearly payments. If you have already put money aside, enter it as the amount already saved. Press Calculate to read the payment per period.
Reading your sinking fund payment
The payment assumes the rate holds for the whole period. If rates fall, pay a little more or extend the date. The interest share grows with time: over one year it is small, over ten years it covers a large part of the target. A sinking fund is about discipline as much as interest, so automating the payment is the surest way to hit the target.
When to use a sinking fund calculator
- Saving for equipment or vehicle replacement
- Funding a bond repayment at maturity
- Planning a home repair or roof replacement
- Building money for a known yearly expense
- Setting a monthly savings goal for any target
Common sinking fund calculator mistakes
- Using a yearly rate as monthly. The calculator divides the rate for you.
- Forgetting money already saved. It lowers the payment.
- Ignoring rising costs. Raise the target for inflation.
- Choosing a risky account for a short goal. Keep near-term money safe.
Tips for using a sinking fund savings calculator
- Name each fund after its goal.
- Automate the payment on payday.
- Review the target once a year.
Sinking fund payment vs saving a lump sum
If you already have the money, investing it once at the start needs less total cash, because all of it earns interest for the full period. To find what a single deposit grows to, use the compound interest calculator. A sinking fund suits costs you will pay out of income over time, and a known date makes it easy to automate.
Where to keep a sinking fund deposit
For targets under three years, a savings account or deposit keeps the money safe and the rate predictable. For longer targets, some savers use funds that can earn more but also fall in value, which the SIP calculator projects at an expected rate. Once the target is reached, the money can also fund a series of payments, and the SWP calculator shows how long it lasts.
Sinking fund schedule: monthly payment to reach 50,000 at 4%
| Time to target | Monthly payment | You pay in | Interest earned |
|---|---|---|---|
| 1 year | 4,090.83 | 49,089.94 | 910.06 |
| 2 years | 2,004.58 | 48,109.91 | 1,890.09 |
| 3 years | 1,309.53 | 47,143.17 | 2,856.83 |
| 5 years | 754.16 | 45,249.57 | 4,750.43 |
| 10 years | 339.56 | 40,747.08 | 9,252.92 |
Sinking Fund Calculator FAQ
How do you calculate a sinking fund payment?
Payment = FV × i ÷ [(1 + i)^n − 1]. For 50,000 in 5 years at 4% paid monthly, that is 754.16 a month.
What is the sinking fund factor?
The multiplier i ÷ [(1 + i)^n − 1] that turns a future amount into a level payment.
What is a sinking fund in bonds?
A bond sinking fund is money an issuer sets aside to repay or buy back bonds before or at maturity.
Is a sinking fund the same as an emergency fund?
No. A sinking fund saves for a known, planned cost. An emergency fund covers the unexpected.