Sorry, I should have been a lot more clear when I wrote this post last night.

1% compounded monthly is what I intended to say, as opposed to compounded continuously or yearly.

You mean 1 percent annual return compounded monthly?

Or 1/12th of a percent monthly return compounded monthly?

1% APY compounded monthly, which is roughly below inflation. And it's taxed of course.

Isn't your second statement the same as the first? 1200 dollar balance returns $1 per month, or $12 per year?

Technically (1 + (x/12))^12 != (1 + x)

In this case where x = 1% (or .01) they're so close it almost doesn't matter. For x = 10% it's a lot clearer.

That said, it's also not equal to (1 + y) ^ 12, where y is whatever value is needed to have (1 + y) ^ 12 = 1 + x.