The way the bank calculates the interest is what matters, not how much interest percentage they promise to give. From my experience dealing with banks, this is where the devil lies: within this detail, so for anyone tempted to put his money in a time saving account, please be alarmed. I can write a paper about this subject and expose banks bad deeds but for now here's what I am sharing so bear with me. Simple interest is the best way to go, but banks only use that when lending money. Simple interest = Yearly interest / 12 = the net monthly profit the banks keeps in his pocket. But, on the other hand, when you open a saving account they calculate the interest using a method that suits them better: a compound interest but with a trick. Compound interest takes into account the calculated sum and not the initial balance and this should be taken into consideration when dealing with 1 month, 3 months or 6 months maturity. So where is the trick?
NuclearVision wroteIs it 6% on the first deposit or on the accumulated current sum? Let's say if you withdraw the interest every month.
It is on the accumulated current sum, but if you withdraw the interest every month you will not reach your yearly promised interest rate.
So how does the bank know how to calculate the interest rate on a monthly basis? Using Compound Interest Formula that can be tested using this
calculator.
So for 5.25% interest => 5.25% compound annually is equivalent to 5.12775% compound monthly. (Monthly is better recommended than yearly when not wanting a long term investment)
For 15,000,000 you will get first month: 15000000 * 5.12775%/12 - 5% tax = 60,892 LL of which they will submit it to further deductions and fees.
So if you want to invest in banks, expect pennies and when you go there ask for monthly net profit on your balance, don't let them tempt you with meaningless interest rate number.
As for inflation, I use this cool
calculator to simulate numbers for a retirement plan. But don't get caught with inflation too much, because the only way to beat it is by buying gold and silver and this is a different subject.