How Money Grows

Manawatu Times, Volume 62, Issue 34, 10 February 1937, Page 3

How Money Grows

SAVINGS-BANK INTEREST. THE SYSTEM EXPLAINED Interest placed to the credit of Post Office savings bank depositors last year amounted to £1,406,459. This largo total was added to the individual ac counts on March 31st last, thus becoming principal and then commencing to earn interest. How money grows at compound interest has been the subject of many interesting calculations, and taking the interest rates of the New Zealand Post Office Savings Bank throughout the years it is found that a sum of £3OO deposited in 1884 reached £1,447 in 1932. The sum of £1 deposited quarterly on present rates of interest (3 per cent, up to £SOO, and 2J per cent, over £SOO and up to £2000) would, in thirty years, reach £193, of which the deposits would have been £l2O and the interest addition £73, while the same process repeated for forty years would involve deposits totalling £l6O and interest £146, bringing the credit balance at the end of that period up to £306. Savings-bank accounts are not centralised in Wellington for there are forty offices distributed throughout' New Zealand where the ledger cards ot depositors are maintained enabling withdrawals to be facilitated, as the money banked is available at these ledger offices on call upon reference to the ledger accounts showing the current credit. About 850,000 accounts are kept open in this way, and interest, although not actually added to the depositor's passbook until the end of the financial year is calculated monthly on each complete £1 at credit for the full month.