When Celebrating A Lucrative Investment I Accidentally Spent Double The Profit

This one time my best mate Scott Newton and I spotted a fantastic Term Deposit rate at the bank.

  • Interest rate: 6%
  • Minimum investment: $600
  • Term: 6 months
  • = Profit: $36!

We could not resist!

We were poor high school students at the time but we scrounged the cash together and we each made our deposits.

We were so proud of ourselves and our sound financial decision making, that we celebrated by spending our $36 profit immediately.

We both bought some clothes and a nice lunch.

6 lean months later we were dismayed to find only $618 back in our accounts!

“Only $18 profit? Surely the bank has made a mistake?! We spent twice that amount to celebrate!” we cried.

But then we realised the error in our calculation. We had forgotten to divide the profit by 2 because of the interest rate being annual, and the term being only 6 months. Oops.

This was a harsh lesson for Scott and he somewhat overcompensated for the mistake by becoming an Accountant and now a Chief Financial Officer.

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