With the help of what has been described as "the strongest force in the universe", you can save yourself a fortune.
We're talking here about the most important factor in savings, namely the compound interest effect. An effect that the genius Albert Einstein is said to have described as "The strongest force in the universe" and "The eighth wonder of the world".
The interest rate effect can easily be explained as:
Interest arises when interest is added to the balance of a deposit so that the added interest will also earn interest.
Explained another way, the return you've earned on your savings will be added to the original savings amount, and you'll then receive interest on both. This is how it continues year after year. The power of compound interest means that your money grows faster every year and over time, small amounts of savings can add up to a fortune.
Examples of the power
To illustrate the enormous effect of compound interest, we have set up some examples.
Since 1987, the world index has returned around eight per cent. Historical returns are no guarantee of future returns, but if we nevertheless use the world index's return as a starting point, the savings examples may look like this.
Example 1: Bjørn (30) starts saving NOK 1,000 a month. 20 years later, his equity savings have grown to NOK 592,947.
If Bjørn had chosen to save in a bank, he would have been left with NOK 265,783 in 20 years at today's interest rate.
Example 2: Married couple Hans (35) and Hilde (35). They have NOK 50,000 in their bank savings account. They choose to save this money in equity funds instead. At the same time, they start saving NOK 1,500 each per month.
20 years later, the value of their savings will be worth NOK 2,011,890.
Through bank savings, the couple would have been left with NOK 857,357 at the current deposit rate. In this example, the difference between bank savings and equity fund savings is well over NOK 1 million.
So what about risk?
Saving in equity funds entails a greater risk of temporary loss, but the probability of long-term gain is greater.
It's very important to realise that savings in equity funds are long-term savings. Over a long savings period, you must be prepared to see your savings fluctuate in value. Savings in equity funds should be viewed over a minimum of five years, and the longer you save, the greater the likelihood of good returns.
How to get started with savings
Click here to go to Kraft Fondenes savings page.
Here, you can easily specify how much you want to save each month and whether you want to deposit a lump sum at start-up. You then register with your personal information and finally sign the customer agreement using your Bank ID.
You have then invested in Kraft Global. By logging in to our website, you can check the progress of your savings on a daily basis and every month we will send you a report on how the fund has performed over the past month.
Would you like to set up a savings agreement with Kraft Global?
Then click here and start saving today!
