## 1- Formula to calculate annual interest on savings deposit

The formula to calculate the total amount received when making a deposit annual

F = M * [((1 + r)^Y + 1 – (1 + r)) / r]

In there

• F is the total amount received at maturity
• M is the periodic installment deposit (annually)
• r is the deposit interest rate
• Y is the number of years in savings

The formula for calculating interest when depositing savings accounts

A = F – (M * Y) = Total amount received – Total principal amount

Where: Total principal = Periodic installment deposit x number of years of deposit ## 2- Formula to calculate monthly installment savings interest

Thus, from the annual formula, we can calculate the total savings in installments Monthly with the following formula

F = M * [((1 + r/n)^(Y*n) + 1 – (1 + r/n)) / r/n]

In there

• F is the total amount received at maturity
• M is the periodic installment deposit (monthly)
• r is the deposit interest rate
• Y is the number of years in savings
• n is the number of times the interest is principally entered per year

When depositing in monthly installments, the number of times the interest is entered principally each year is 12 times, so:

F = M * [((1 + r/12)^(Y*12) + 1 – (1 + r/12)) / r/12]

• Total amount at maturity = Monthly Recurring Deposit * [((1 + lãi suất/12)^(Y*12 + 1 ) – (1 + lãi suất/12)) / lãi suất/12]
• Total principal = Monthly recurring deposit * 12 * number of years of deposit (Y)
• Installment interest amount = Total amount at maturity – total principal

## 3- How to calculate monthly installment savings interest rate according to the formula

For example, a customer starts saving and makes a monthly installment of 1,000,000 VND within 10 years, the deposit interest rate is 5%/year.

Summary:

• Recurring deposit amount: 1,000,000 VND
• Deposit Period: Monthly (Once a month)
• Sending period: 10 years
• Deposit interest rate: 5%/year

Calculation:

• Total amount at the end of the period = 155,929.289 = 1,000,000 * [((1 + 5%/12)^(10*12 + 1 ) – (1 + 5%/12)) / 5%/12]
• Total principal = 10 years * 12 times/year * 1,000,000 = 120,000,000 VND
• Amount of profit = 155,929,289 – 120,000,000 = 35,929,289

→ See details Formula and how to calculate monthly installment savings interest on excel HERE