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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
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
References
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