I am not dealing with the banks for last 11 years but, if I remember correctly, they were offering 4% (by the government banks) and 7%-8% (by the private banks) APR and there were minimum required amount as well.
Simply extrapolate the 12% return out over 5 years and you will see what you are getting. Of course, adding to it will only ensure the numbers keep growing.
So, I agree with you this is a piggy bank and could turn out into something good with continuous savings however smaller they are. If one cannot save big amounts then they can save small amounts that will not add or substract anything meaningful from their day to day expenses and if anyone wants to save a big amount to earn more than reasonable amount then, IMHO, this is way better than the banks.
I cant speak for everywhere but in the US banks are paying under 1% in most instances. Even the 10Y Treasury is only at around 2%.
The key to the savings is to get started and keep adding. No matter what is being put in, it will add up over time (there is that word again). As we allow time to compound our holdings, plus adding to them, we see the numbers get bigger.
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Agreed.