Monthly Investments

The Power of Compound Interest

Albert Einstein called compound interest \"The most powerful force in the universe.\" In the first and second years of continuous investment, you hardly see any difference. It seems like your money isn't going anywhere. But if you are consistent (Monthly Contributions), the \"snowball effect\" becomes unbeatable in the long run.

Interest on Interest

In the first month, the bank pays you 1% interest on the R$ 1,000 you deposited (R$ 10). In the second month, the bank does not pay you interest just on the thousand; it pays you interest on R$ 1,010! And so on. Over a period of 15 to 20 years, more than half of your final wealth will not have come from your hard work, but from the growth generated by interest itself working overnight for you.

The most common safe rates in Brazilian Fixed Income (Tesouro Direto Selic, CDBs) range between 0.8% to 1% per month when the country's basic interest rate is high. In a regular savings account, the rate usually stays around 0.5% or 0.6% per month (being the worst choice you can make).