The Snowball Effect
VNIT's green chart shows an upward curve over time. This proves: Time is more important than capital.
Starting to save $1,000/month from age 20 will yield much greater results than saving $5,000/month starting at age 40.
The Crossover Point - When Money Works For You
A unique feature on VNIT's compound interest tool is the ability to identify The Crossover Point.
- This is the moment when annual interest generated exceeds your annual contributions.
- Example: You contribute $12,000/year, but that year's interest is $14,000.
- Meaning: From this moment, your asset base has the ability to sustain and grow itself without you needing to "pump" in too much additional money.
How to Reach Your First Million?
The number $1 million may sound distant, but if broken down, it's completely within reach. Switch to the "Goal Calculator" tab, and the tool will tell you:
"To have $1 million after 10 years with a 10% interest rate, you only need to save about $5,000/month (equivalent to a few cups of coffee per day)."
Seeing the small daily number will help you maintain better financial discipline.
Important Note: Returns Must Exceed Inflation
Frequently Asked Questions
💡What is compound interest?
Compound interest is simply "interest on interest". The interest generated after each period is added to the principal to continue calculating interest for the next period, creating exponential growth.
📊What is the Rule of 72 in compound interest?
The Rule of 72 is a quick formula to calculate the time needed for your capital to double. Formula: Years = 72 divided by Annual Interest Rate. Example: With a 10%/year interest rate, you need 72/10 = 7.2 years to double your assets.
⚖️What's the difference between simple and compound interest?
Simple interest only calculates interest on the initial principal. Compound interest calculates interest on both the principal and previously accumulated interest. In the long term (over 10 years), compound interest yields significantly superior returns compared to simple interest.