Compute the fixed monthly interest from a lump-sum deposit in a fixed-rate Monthly Income Scheme, the total interest over the term, and the principal returned at maturity, suited to those seeking steady monthly cash flow.
Input Data
Results
At a glance:A Monthly Income Scheme pays simple interest monthly on a fixed deposit; the principal is returned intact at maturity.
Formula
monthlyIncome = deposit × annualRatePct% / 12
totalInterest = monthlyIncome × 12 × years
maturityAmount = deposit
$$Monthly = Principal \times \dfrac{Rate}{12}$$$$Total\ Interest = Monthly \times (Years \times 12),\quad Maturity = Principal$$How to Use
- Enter the deposit principal.
- Enter the annual rate and term.
- Review the monthly income, total interest, and maturity principal.
FAQ
What is a Monthly Income Scheme and how is the monthly income calculated?
A Monthly Income Scheme is a fixed-income product where you deposit a lump sum, receive a fixed monthly interest during a lock-in term, and get the principal back intact at maturity — common in postal savings and some banks' monthly-payout deposits. Monthly income = principal × annual rate ÷ 12. With HK$900,000 at 7.4%, monthly income = 900,000 × 7.4% ÷ 12 = HK$5,550. Total interest = monthly income × months (5 years = 60 months → HK$333,000), and the HK$900,000 principal is returned at maturity. Note this is simple interest — the paid-out interest does not compound; total interest is just monthly income × months, unlike a compounding deposit.
Who is it for, and how does it compare with a compounding deposit?
It suits people who need steady monthly cash flow — typically retirees turning savings into a regular income, with principal preserved. Its strength is predictable income and (usually) capital safety. But if your goal is to maximise growth, it may not be best, because it pays simple interest: the monthly interest is paid out, not left to compound. A monthly-compounding deposit would yield more total return over the same term. So it is a trade-off between 'monthly cash flow' and 'capital growth'; if you don't need the monthly interest, reinvesting it creates your own compounding. This calculator shows the no-reinvestment simple-interest case.
What should I watch for — will results match the actual product?
This calculator uses a generic 'monthly simple interest, principal returned at maturity' model and may differ from real products. First, simple/no-reinvestment: it assumes paid interest is not reinvested; reinvesting raises the real return. Second, rates and terms vary by institution (rate, term choices, min/max amounts, early-redemption rules) — this uses one fixed rate. Third, early withdrawal usually carries penalties or reduced interest. Fourth, tax on interest is not included. Fifth, inflation erodes the fixed monthly income's purchasing power over long terms. Sixth, not all 'monthly-payout' products are capital-guaranteed — some linked products carry principal risk. Actual rates, penalties, tax and capital protection follow the product contract; this tool is for planning only, not a substitute for the institution's terms.
How do principal and rate affect monthly income — how much do I need to deposit for a target income?
Monthly income = principal × annual rate ÷ 12, so it is directly proportional to both principal and rate. At 7.4%: HK$300,000 → HK$1,850/month; HK$600,000 → HK$3,700; HK$900,000 → HK$5,550; HK$1,200,000 → HK$7,400 — double the principal, double the income. To reverse it for a target monthly income: required principal = target monthly income × 12 ÷ annual rate. To receive HK$5,000/month at 7.4%, you need about HK$810,811; at only 4%, the same HK$5,000 needs HK$1,500,000. Rate therefore hugely affects the principal needed for the same income — the core of retirement cash-flow planning: set the monthly gap, then back out the required principal at a realistic rate. Try different principal/rate combinations here.
How do I choose between a Monthly Income Scheme, a recurring deposit and a fixed deposit?
All three are low-risk deposit-style tools, but differ in funding style and goal. First, Monthly Income Scheme (this calculator): deposit a lump sum once, get monthly interest to spend, principal returned at maturity — simple-interest payout, for those with a lump sum who need monthly cash flow (e.g. retirees). At 7.4%/5yr on HK$900,000 you get HK$5,550/month and HK$333,000 total, principal returned. Second, Fixed Deposit (FD): also a lump sum, but interest usually compounds into principal, paid at maturity — no monthly flow, but compounding gives higher total return if you don't need the interest. Third, Recurring Deposit (RD): no lump sum needed — deposit a fixed amount each month, it compounds and pays out at maturity, for disciplined salary-based saving. In short: lump sum + need monthly income → Monthly Income Scheme; lump sum + want growth → FD; no lump sum, save monthly → RD. They combine well across life stages — use RD to accumulate when young, then move the lump sum into a Monthly Income Scheme for income in retirement.
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.