THE MAGIC OF COMPOUND INTEREST

1. WHAT IS COMPOUND INTEREST?

When asked how the current billion-dollar fortune is, Warren Buffett said: "My wealth has come from combination of living in American, some lucky genes, and compound interest." In fact not only Warren Buffett but many great men in the world have acknowledged the magic of compounding. Albert Einstein once said: "Compound interest is the 8th wonder of the World. He who understand it earn it, he who doesn’t pay it. ” So what is the compound interest, the power of compound interest like that is highly appreciated?

Compound interest - are simply understood that the interest you receive will continue to add to your initial capital to continue earning interest.

2. THE POWER OF COMPOUNDING?

Anyone must have a starting point, be it the rich or the most successful. Billionaire Warren Buffett is not always as rich as he is today. In fact, 99% of his wealth is earned after 50 years of age. He has gradually built up his huge wealth over the years and now, as he turns 85, Buffett becomes one of the five richest people in the world with an estimated fortune of over $ 60 billion.

Investing with a small but steady and disciplined amount of money will give you a large asset value over time from the total accumulated value, investment return and interest rate during that time. The power of compounding becomes evident over a long period of time because profits become more and more large.

For example: Investors invest in the SIP of DFVN-CAF VND 1,000,000 (one million VND) per month, the amount of money that investors can receive corresponding to the investment time and profit rate different assumptions are as follows:

(Note: The example is for illustrative purposes only and is not intended to provide a forecast or calculation of investment results.)

3. HOW TO GET BENEFICIARY COMPOUND INTEREST?

You don't need to be rich to benefit from compound interest. Whether you invest VND 1 million or VND 10 billion, compound interest still works for you. For individual investors, in addition to being able to choose to invest through a professional fund management company, the following should be done to benefit from compound interest.

Invest as soon as possible

No matter how old you are, you should start investing and investing as soon as possible. Even in small amounts, compound interest will help multiply your investment amount several times over the same time.

Keep discipline and long-term orientation for your investment

Keep discipline and long-term investment with small and regular amounts. This means that some investment is not so big that you must worry about it when the market changes or affects your regular financial spending plan. If discipline and long-term maintenance are maintained, market fluctuations are "neutral" and risks are minimal but still do not miss investment opportunities. The above example shows that, with an investment of only 1 million VND / month, after 30 years with a assumed profit of 12%, the investment result will be 3.49 billion VND.

"Automation" or "pre-extract" to ensure maintaining investment discipline

Join a Systamatic investment plan of a professional organization like a fund management company as one of the "tips" to help you maintain discipline and benefit from long-term investment.

Accepting a reasonable level of risk to expect better profitability

In investment, profits and risks are always proportional to each other. Accepting a reasonable level of risk to expect better profitability is also a way to benefit from compounding interest.

The above example also shows that, with an investment of 1 million VND / month, after 30 years, the investment results will be very different with different profit levels. If the assumed profit is 8% / year, the investment result after 30 years is 1.49 billion VND, if the assumed profit is 15%, the investment result is 6.9 billion VND

4. INVEST IN DFVN-CAF FOR BENEFITS OF COMPOUND INTERESTS