By: Tarun Prakash Srivastava, Sr. Executive Editor-ICN Group
It is a matter of the fact that you can keep the value of your savings safe by earning interest in fixed deposits or recurring deposits on your savings.
If the rate of interest is slightly higher than the rate of inflation, you may also get a little extra income on that money, but it is certain that it will remain insufficient in every way to make you rich.
Let’s look at how this savings can worsen:
| Time | Saving | Devaluation @ 5% | Balance amount |
| Balance of the third year + saving of fourth year | 650.37 percent + 240 percent = 890.37 percent | 44.51 percent | 845.851 percent |
| Balance of the fourth year + saving of fifth year | 845.851 percent + 240 percent = 1085.851 percent | 54.29 percent | 1031.55 percent |
| Balance of the fifth year + saving of sixth year | 1031.55 percent + 240 percent = 1271.55 percent | 63.57 percent | 1207.97 percent |
| Balance of the sixth year + saving of seventh year | 1207.97 percent + 240 percent = 1447.97 percent | 72.39 percent | 1375.57 percent |
| Balance of the seventh year + saving of earth year | 1375.57 percent + 240 percent = 1615.57 percent | 80.77 percent | 1534.79 percent |
| Balance of the earth year + saving of ninth year | 1534.79 percent + 240 percent = 1774.79 percent | 88.73 percent | 1646.06 percent |
| Balance of the ninth year + saving of tenth year | 1646.06 percent + 240 percent = 1886.06 percent | 94.30 percent | 1791.76 percent |
| Balance of the tenth year + saving of eleventh year | 1791.76 percent + 240 percent = 2031.76 percent | 101.58 percent | 1930 percent |
Just be careful, even keeping the same level of savings of your every year, as soon as you enter the eleventh year, your savings decreases by 101.58%, i.e., you get 1.58% of your money out of your pocket beside the loss of 100% saving for said year.
You lose more than one and a half percent of your total savings including saving of the eleventh year. The amount more than your total savings of the eleventh year has been smoked out from you accumulated funds. Note – as your years shall increase, the percentage of your losses will also be increased.
This situation is being shown when we have assumed that the percentage of increase in inflation is only five percent, but in reality, this percentage is much higher and it is temporary also.
The purpose of presenting this equation of your annual savings and inflation is simply that you can understand well that if the difference between the level of inflation and the percentage earned on your income will be the same, the difference between your eminence and poverty will be equal.
You should try to move higher and higher than the percentage of inflation and move towards the higher percentage of earnings through your savings. If the level of inflation is five percent, then the percentage of earnings of your income should not be less than ten percent, because only then, we can say that your savings have now become your earning child.
Looking at the general point of view, it seems that the inflation rate of five percent will touch the rate of 100 percent in the next twenty years, but by the impact of a principle of compounding; it reaches that level in eleven years only. Remember, the establishment of the bank has never been done to make you rich.
Banks prepare their statement of profit-loss every quarter for themselves and not for you. You must always be rich by your efforts.
Tarun Prakash Srivastava
From my book ‘Science of Money’ available on Amazon.com in English at http://bit.ly/Science-Of-Money and in Hindi at http://bit.ly/साइंस-ऑफ़-मनी
