Sinking Fund Calculator
Calculate the regular deposits needed to reach your target amount.
Year-by-Year Growth
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Request a ToolHow to Use the Sinking Fund Calculator
A sinking fund is a systematic saving plan where you make regular deposits to reach a specific target amount by a specific date. This calculator tells you how much each deposit needs to be:
- Enter your target amount. This is the total you want to accumulate, such as a down payment, a vacation fund, or a planned purchase.
- Enter the interest rate. If your deposits earn interest (e.g. in a high-yield savings account), enter the annual rate. If no interest is earned, enter 0.
- Enter the time period. How many years you have until you need the money.
- Choose contribution frequency. How often you plan to make deposits: monthly, bi-weekly, weekly, quarterly, or annually.
The result shows your required periodic deposit. The year-by-year table shows how your balance grows over time through deposits and earned interest.
About Sinking Funds
A sinking fund is a planned savings strategy for a known future expense. Instead of scrambling to find a large sum when you need it, you set aside small, regular amounts over time. The concept comes from corporate finance, where companies create sinking funds to repay bonds at maturity, but personal finance has adopted the same principle.
Common uses include saving for a car, a vacation, holiday gifts, annual insurance premiums, a wedding, or a home down payment. The key advantage is predictability: you know exactly how much to set aside each period. If your deposits earn interest, you end up depositing less than the target because interest makes up the difference.
Frequently Asked Questions
What is a sinking fund?
A sinking fund is a systematic savings plan where you make regular deposits to accumulate a specific amount by a specific date. It is used for planned future expenses like a down payment, vacation, or large purchase. The term comes from corporate finance where companies set aside money to repay bonds.
How is a sinking fund different from regular savings?
A sinking fund has a specific target amount and deadline. Regular savings may be open-ended. Sinking funds are typically kept separate from emergency funds and retirement savings so you can track progress toward the specific goal without mixing purposes.
Does the contribution frequency matter?
More frequent contributions (weekly or bi-weekly vs monthly) slightly reduce the total amount you need to deposit because each contribution starts earning interest sooner. The practical difference is small, so choose the frequency that best matches your paycheck schedule.
Where should I keep a sinking fund?
A high-yield savings account is the most common choice because it earns interest while keeping the money liquid and FDIC-insured. For longer time horizons (3+ years), you might consider CDs or a conservative investment account, but only if you will not need early access to the money.