May 3, 2014

Cory Diary : Damn to the Saver with Fixed Deposit

There are people who are believers of Saving and Fixed deposit.
Here's the Math for them.

Assuming I strike lottery $1M dollar on 1st Year. The next year I start to lose $29,100 due to loss of purchasing power. Many people cannot even save that amount of money to compensate for the yearly loss.

Year Principal Fixed Deposit Inflation Effective Purchasing $
1 $1,000,000 1.00% 4.00% -3.00% $970,000
2 $1,000,000 1.00% 4.00% -3.00% $940,900
19 $1,000,000 1.00% 4.00% -3.00% $560,613
20 $1,000,000 1.00% 4.00% -3.00% $543,794

Continue my way till Year 19th. Original $1M left with $560,613. On the Year 20th, I will lose another $16,819 that year.

Conclusion
The more money I have the more I lose. I will never be able to retire early.


Cory
3rd May 2014

No comments:

Post a Comment