How does $1000 grow in a high-interest savings account?
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When it comes to money goals, a long-term view can lead to larger returns. But why is that? Generally, a mix of compound interest and regular monthly deposits can grow an initial balance of $1000 over a long period of time.
Compound interest is one of the many tools that you can employ in your financial journey. By building up your savings in a strategic and long-term way, you can build up enough for a rainy day fund, a deposit on a home loan, or an offset account for an existing mortgage.
$1000 at an interest rate of 4.53%
Using the highest bonus rate on the Mozo database (4.53% p.a.), we can get a good idea of how much money you’ll end up with over 10 years.
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By just letting your money sit in an account and gain interest, your savings would grow to $1571.68—that’s an additional $571.68 in interest. This is how you can get your money “working for you”.
One way you can augment your savings further is by making regular deposits too. If you were to make a monthly deposit of $200, after 10 years your savings would grow to $31,860.
$1000 over a longer period of time
Time is the aim of the game when it comes to compound interest. So let’s say you threw this same $1,000 in a high-interest savings account for a 30-year period. How much more interest would you gain?
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The resulting interest you would gain is $2882.35 for a total ending balance of $3882.35. If we add our monthly contributions of $200 to this calculation, we end up with a total ending balance of $156,590 with $83,590 coming from interest.
Just keep in mind that all these calculations assume that the interest rate stays the same. Since savings accounts have variable rates, they can rise and fall depending on the economic climate. If you’d feel more comfortable locking your savings away with a fixed interest rate, then a term deposit may be more appropriate.
Not sure if you’ve got the highest interest rate you can get on your savings account? Check out some of the providers below or hop on over to our savings account page.
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