Investment Growth Chart
One of the benefits I truly enjoy is having USAA as my insurance company. It only took me one phone call to their customer service center to know why they consistently rank in the top of companies for customer service. I can think of a few big companies that could learn a lot from how USAA treats their customers/policy holders.
In their recent magazine, I quickly noticed the chart below that is called, "The Snowball Effect" while flipping through. The heading that was cut off states the following:
"What’s the hardest-working investment tool you can use? The power of time. Beth, Bob and Bridget all invested $2,500 at the same 6 percent rate of return. But see how compounding made Beth’s account grow? That’s the value of starting early."
Going back to high school and college one of the first lessons one learns is the time value of money and compounding effect. I won’t get into that, but what I did want to touch on is the chart below that left me speechless for a bit. There are so many things wrong with it that it wasn’t even worth taking out my red pen.
I recreated the data from the chart in Excel (shown below) and used fictitious numbers for the middle of the graph. Each person starts with the same money and each has an end amount. So I basically filled in the blanks. I know my chart doesn’t have Beth with her arms raised in celebration or decimals, but it’s definitely a lot cleaner and easy to understand. This isn’t rocket science, is it?
November 24th, 2009 at 9:46 am
They were sticking with their “snowball” metaphor.
To me, the snowball metaphor means something else. First, the snowball is growing as it rolls DOWN a hill. Second, I picture something going out of control, and not in a good way.
Maybe that’s just a strange personal interpretation?
November 24th, 2009 at 12:13 pm
Your chart shows the exponential growth of compounding interest better, but it’s also boring. So I don’t think the line chart is really an improvement, because while it improves one aspect, it’s worse in another. Perhaps the lines could be superimposed on the snowball chart (with much reduced contrast). There must be a way to balance a metaphor with information that works in both directions.
I also don’t think Jon’s snowball metaphor explanation quite captures how people normally use it.
November 24th, 2009 at 10:38 pm
I’m not sure exactly what the metaphor means to you. I understand the metaphor of the snowball growing exponentially when you roll it. Doesn’t have to be downhill, just around the yard would work.
I also get that the snowball effect can mean things getting out of control in a bad way.
November 24th, 2009 at 10:47 pm
Robert, thanks for the comment. You got me thinking about the boring aspect. I would venture to say that in the corporate world 80% effective and 20% flashy or 90-10 would be a guess as to the average visualization. In regards to magazines, I would expect that ratio to be more like 50-50 because they need to capture attention.
So the audience does play an important role in design. Graphic designers for magazines probably wouldn’t touch my version with a ten foot pole. Conversely, an executive would probably welcome my approach much more than the goofy chart USAA created.
In terms of the metaphor in general, what if you have never seen snow? What if you live in the deep south and don’t understand the way a small snowball can grow into a massive snowman. I get the metaphor, but also think it’s pretty silly.
November 25th, 2009 at 12:17 am
And what if you hate snow? You wouldn’t think associate snow with something good, would you? I don’t mind the snow too much, except when I have to clear my driveway. But at those times, it is my archenemy.