The Magic of The Doubling Penny

You may have heard about what happens if you double a penny every day for a month. Usually someone will give you a choice between taking a million dollars today or a penny that doubles every day for a month. A lot of people will instinctively choose the million dollars because it seems nearly impossible that doubling a penny every day for a month would be more than a million dollars, but IT IS!

You would actually have $10,737,418 at the end of the month!!!

With that in mind, we want to take it a step further to highlight the importance of letting that penny grow uninterrupted by comparing it to four big wealth destroyers (Fees, Volatility, Taxes, & Interrupting Compounding). This is what happens when you inject the wealth destroyers into the equation:

1. FEES: If you double your penny every day, but pay just a little 2% fee — you’ll have $5,857,093 at end of month.

2. VOLATILITY: If you double your penny every day, but have only three days of volatility (a negative 40% return on days 10, 20, and 30) — you’ll only have $289,910 at end of month.
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3. TAXES: If you double your penny every day, but you pay a 25% tax on the growth of your penny — at end of month you'll have $1,918.

4. INTERRUPTING COMPOUNDING: If you double your penny every day, but on day 21 you use the cash to buy a car and reset the compounding back to a penny — you'll have just $2.56 at end of month.

Between those four wealth destroyers, we are talking about a difference of MILLIONS OF DOLLARS 🤯 ($4,880,325 to $10,726,930)!

So, you can see how important it is to avoid these four wealth destroyers as best as possible. Our clients can use three distinct tools to avoid or severely reduce all four of the wealth destroyers to allow their money to compound uninterrupted EVEN if they use their money!

If you want to learn how to protect yourself from these threats to your money, let's setup a time to talk.

Here's the math on these four wealth destroyers so you can see it with your own eyes: