EXAMPLE:

Sevings account A and savings account B each have $100,000 cash balance in January 1996.

​

Account A earns interest based on the performance of the S&P 500 stock market index, both gains and losses.  If the index exceeds  0%, the interest credited to the account balance is the growth of the index.  If the index is less than 0%, the account is adjusted  by the negative interest and the principle balance changes accordingly.

​

Account B earns interest based on the performance of the S&P 500 stock market index  also but has a floor.  If the index exceeds  3%, the interest credited to the account balance is the growth of the index less 3%.  If the index is 3% or less, the account balance receives no interest and the principle balance does NOT change.

​

Using this example over the period 1996 through 2016, Account A would end the period wilh a gross principle balance of $304,567.  Over the same period, Account  B would have a gross principle balance of $551, 921.