Crossover Point: When Passive Income Exceeds Contributions
This chart visualizes the investment crossover point - the moment when your monthly passive income from investments equals or exceeds your monthly contribution amount. The blue line represents your constant monthly contribution, while the green curve shows your growing passive income over time.
Portfolio Growth Breakdown: Contributions vs Interest
This chart shows how your portfolio grows over time, breaking down the total value into your cumulative contributions (including starting balance) and the interest earned through compound growth. The blue area represents your contributions, while the green area shows interest earned.
Understanding the Crossover Point
What is the Crossover Point?
The crossover point is the moment when your investment portfolio generates enough monthly passive income to equal or exceed your monthly contributions. It's a significant milestone in your wealth-building journey.
At this point, your money is literally working harder than you are. Every dollar your portfolio earns is now greater than every dollar you're putting in.
Real-World Examples
Example 1: The Early Starter
Sarah, 25, invests $500/month at 7% returns. She reaches her crossover point in about 18 years with a portfolio of ~$215,000 generating $1,250/month.
Example 2: The Catch-Up Investor
Mike, 40, starts with $50,000 saved and invests $1,000/month at 7% returns. His starting balance helps him reach crossover in about 12 years.
Example 3: The Aggressive Saver
Lisa, 30, maxes out her 401k at $1,875/month at 10% returns. She reaches crossover in just 11 years with a portfolio over $400,000.
Coast FIRE: A Related Concept
Coast FIRE (Financial Independence, Retire Early) is the point where you've saved enough that, even without further contributions, your portfolio will grow to support your retirement by a target age.
The crossover point is related but different: it's about when passive income exceeds contributions, not when you can stop working entirely. However, reaching the crossover point is often a major milestone on the path to Coast FIRE.
Should You Stop Contributing After Crossover?
Reasons You Might Reduce/Stop
- Redirect funds to other goals (home, education, experiences)
- Reduce work hours or stress
- Your money is already growing faster than you can add to it
- Diversify into other asset classes
- Enjoy life now rather than only saving for later
Reasons to Keep Contributing
- Accelerate wealth building during peak earning years
- Build buffer against market downturns
- Tax advantages (401k, IRA contributions)
- Dollar-cost averaging reduces timing risk
- Reach financial independence even faster
Important Considerations
- Market volatility: Returns aren't guaranteed. The 7% "moderate" rate assumes long-term averages, but year-to-year returns vary wildly (-30% to +30%).
- Inflation: Enable the inflation toggle to see real (purchasing power) returns. A 10% nominal return with 3% inflation is really only ~7% growth in buying power.
- Sequence of returns risk: When you retire matters. A market crash early in retirement hurts more than one later.
- This is simplified: Real portfolios have taxes, fees, rebalancing, and varying contribution amounts over time.
- Past performance: Historical returns don't guarantee future results. The S&P 500's ~10% average includes periods of negative returns.
The Power of Starting Balance
Notice how adding a starting balance dramatically reduces your time to crossover. This demonstrates compound interest in action.
A $50,000 head start doesn't just add $50,000 to your final balance—it adds $50,000 plus all the growth on that $50,000 for every year it's invested. At 7% returns over 20 years, that $50,000 becomes nearly $200,000.