My Money is Rotting in the Bank!

The Government recently announced that the inflation rate for Malaysia in February 2009 was 3.2%. The current interest rate for my current account savings is 1.25%. This means that the money in my account is rotting at a rate of roughly:

1.25 - 3.2% = -1.95% per year

That kinda sucks. Well I have another foreign currency account holding New Zealand dollars that's giving me an interest rate of 4.99%. The inflation rate for New Zealand in January 2009 was 3.4%. Without taking into consideration exchange rate fluctuations / risk, my New Zealand dollars are doing fairly better growing at roughly 

4.99% - 3.4% = 1.59% per year

I chose to hold my savings in New Zealand Dollars for the following reasons:

1. New Zealand has the highest interest rates among all developed countries (I was getting 7.99% p.a. for my savings account before the credit crunch hit)
2. The Governor of the Reserve Bank of New Zealand practically has the target of keeping inflation between 0% to 3% written in his job description - so he will not give-in to pressure from businesses to lower interest rate for the sake of economic activity
3. New Zealand is politically stable and very much less corrupted
4. Bank savings are now guaranteed by the Government

The rule of 72 is used as a quick way to estimate how long it will take your money to double in years. Just divide 72 by the return on investment per year. So in the case of my NZ current account, it's:

72 / 4.99% = 14.4 years.

Damn... if I have $10 in my bank account, it will take me 14.4 years for it to grow to $20. And that's not even taking into account of inflation! If you take inflation into account, the time it takes my purchasing power to double becomes:

72 / 1.59% = 45.3 years. 

That's very sad... That's also the reason why I'm still studying businesses and investments because only these financial vehicles offer a higher annual return on investments, which decreases the time it takes for money to grow.