# Interest on the deposit and inflation

Money can be put into the banking account for the interest. E.g. for a year. Besides, everybody knows about the inflation. And everybody intuitively understand that a hundred rubles at the end of the year are not the same as 100 rubles at the beginning of the same year - you are able to buy less for the same amount. Let's try to understand whether it's profitable to put money into the bank account to get your interest at the end of the year. In 2007, the inflation rate in Russia was 11.9%. E.g. we put 10 000 rubles in the bank for a year at 9% per annum (compound interest accrued on a monthly basis - the most profitable option), at the end of the year we will get about 10 938 rubles. However, it's equal to 9 716 rubles at the beginning of the year. In other words, the obtained 10 938 rubles at the end of the year equal in the purchasing power to 9 716 at the beginning of the same year. But we had 10 000 rubles and at the beginning of the year we could have bought for 284 rubles more :(

Anyone willing to play around with the figures can do it in the calculator below:

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