Calculating your annual deposit needed is straightforward once you know the Sinking Fund formula and what each input means. This guide explains the method in plain language, walks through a manual calculation, and gives worked examples you can follow — then you can do it instantly with the Sinking Fund Calculator.
What is Sinking Fund?
The Sinking Fund calculation tells you your annual deposit needed from a few simple inputs. The figure you are solving for here is the annual deposit needed, expressed in INR.
The Sinking Fund formula
The core formula is:
Annual deposit needed = Target amount × (Annual interest rate ÷ 100) ÷ ((1 + Annual interest rate ÷ 100)^(Time to reach target) - 1)Here is what each input means:
- Target amount — a money amount. Example: ₹10,00,000.
- Annual interest rate — a percentage, such as an annual rate. Example: 8%.
- Time to reach target — a value you set on the slider. Example: 10 years.
How to calculate it step by step
- Write down the target amount (for example, ₹10,00,000).
- Write down the annual interest rate (for example, 8%).
- Note the time to reach target (for example, 10 years).
- Apply the formula above to get your annual deposit needed.
- Double-check the result with the Sinking Fund Calculator.
Worked examples
Example 1
| Input / Output | Value |
|---|---|
| Target amount | ₹10,00,000 |
| Annual interest rate | 8% |
| Time to reach target | 10 years |
| Annual deposit needed | ₹69,029 |
With target amount of ₹10,00,000, annual interest rate of 8% and time to reach target of 10 years, the annual deposit needed works out to ₹69,029.
Example 2
With target amount of ₹20,00,000, annual interest rate of 8% and time to reach target of 10 years, the annual deposit needed works out to ₹1,38,059.
| Result | Value |
|---|---|
| Annual deposit needed | ₹1,38,059 |
Example 3
With target amount of ₹5,00,000, annual interest rate of 8% and time to reach target of 10 years, the annual deposit needed works out to ₹34,515.
| Result | Value |
|---|---|
| Annual deposit needed | ₹34,515 |
Tips for an accurate result
- Keep your units consistent — mixing, say, months with years or grams with kilograms is the most common source of error.
- Round only at the very end. Rounding inputs early can shift the final answer noticeably.
- Re-run the numbers whenever an input changes, rather than estimating from an old result.
- Annual rates must be converted to the period you are calculating for (for example, divide an annual rate by 12 for a monthly figure).
Prefer not to do the maths by hand? — the Sinking Fund Calculator does it instantly, for free, with the formula and a worked example built in.
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