Periodic deposit
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A periodic deposit is an investment made in the form of equal deposits over a regular time period. Each deposit recurs after a time interval. Such an investment is made to achieve a pre-planned financial objective and/or when the available capital to invest is limited.
In simpler words, periodic deposit is a deposit recurring on a periodic basis. Investments are made over the period, grow over the period and mature at the end of the period.
Real world example
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John is planning investments for his retirement. He has decided to invest an amount of US$150.00 per pay check over a period of 30 years. He receives his pay check twice every month. The interest rate expected is 10% per annum with quarterly compounding.
Investment
| Starting amount | Deposit mode | Periodic amount | Period | Interest rate | Compounding |
|---|---|---|---|---|---|
| US$0.00 | Semi-monthly | US$150.00 | 30 year | 10% | Quarterly |
*All deposits made at start of the period
Returns
| Invested amount | Interest accrued | Maturity amount | Gain |
|---|---|---|---|
| US$108,000.00 | US$562,498.37 | US$670,498.37 | 520.83% |
See also
[edit]References
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