Enter a goal savings amount, annual interest rate, compounding frequency, and a number of periods. The calculator will evaluate and display the required monthly payment to reach the savings goal.

## Sinking Fund Formula

The following formula is used to calculate the periodic payment amount to reach a savings goal.

PMT = FV * i / (1+i)^n – 1

- Where PMT is the periodic payment
- FV is the savings goal amount
- n is the number of periods
- I is the annual interest rate or return

## Sinking Fund Definition

A sinking fund is a financial term that describes a periodic payment to a savings fund in order to reach a certain savings amount. In other words, if you want to save 30,000 over 5 years, the sinking fund would be the amount you need to contribute each year or period.

## Sinking Fund Example

How to calculate payments on a sinking fund?

**First, determine the savings goal amount.**Determine the total final value of the savings goal.

**Next, determine the number of periods you have to save.**This is most often measured in years.

**Next, determine the average return on the savings.**The stock market historically returns roughly 10% per year.

**Finally, calculate the monthly payments.**Calculate the monthly payments to the sinking fund needed to reach the final value.

## FAQ

**What is a sinking fund?**

A sinking fund is a periodic payment into an investment that is required to reach a certain goal at a certain time.