Jasper County Democrat, Volume 16, Number 95, Rensselaer, Jasper County, 28 February 1914 — HOW SAVINGS GROW. [ARTICLE]

HOW SAVINGS GROW.

Compound Interest Will Work Wonders With Bank Deposits. A savings bank in Evanston has advertised that it will place $1 to the credit of every baby born in that city, and it advises the parents of the children to deposit on each birthday of the child as many dollars as the youngster is old, then let the money remain in the bank, drawing interest, until the child reaches 21. It is a clever advertisement and excellent advice. If parents did that, the total sum deposited to the credit of the child upon its twenty-first birthday, including s2l for that birthday, would be $231, or an average of sll a year. But the bank account on that twenty-first birthday would show a much larger sum $284 .59, in fact, computed at the savings bank rate of interest, 3 per cent.

That is, the sum of $53.59 will have been paid in interest, enmpounded. The amount which would accrue at simple interest would be $46.20, or more than twice the amount deposited on the twentyfirst year, while the actual interest received would be two and a half times the last deposit. Besides, the interest on interest—that is, the excess produced by compounding—would amount to $7.39, or more than one third of the final and largest deposit, and would be about 69 per cent of the average yearly deposit of sll. Thus is well shown how money breeds itself, and there is little doubt that parents able to make such deposits would afford to their children a remarkable illustration of the value of thrift and its influence in life, besides giving each youngster a substantial sum with little hardship to the depositor.—Chicago Inter Ocean