Doubling a penny is a popular financial strategy that has actually been around for centuries and transcends cultures. The Indians tell a story of the Raja and the poor old man who asks for rice that doubles for each square on a chessboard. Before long the poor old man had emptied the Raja's entire store of rice for his entire kingdom.
The "double a penny for 30 days" challenge is based on the idea of compound interest, which is the concept of earning interest on interest. Compound interest is a powerful tool that can be used to grow wealth over time. Double a penny is a specific application of compound interest that can be used to grow wealth incredibly fast.
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- The "double a penny for 30 days" concept is a powerful way to demonstrate the power of compound interest.
- It is possible to compound from $0.01 to $5,368,709.12 in only 30 days.
- Find real investments and pay as little tax as legally possible.
Compounding every day
Compound interest is the concept of earning interest on interest. It is a magical tool that can be used to grow wealth over time. When compound interest is applied to an investment, the interest earned on the original investment is added to the principal, and the new total is then used to calculate the next interest payment. This process is repeated over time, allowing the investment to grow exponentially.
The benefits of compound interest are twofold.
- First, it allows investors to earn more money over time.
- Second, it allows investors to grow their wealth without having to make additional investments.
A penny compounded day by day
Doubling a penny is a specific application of compound interest. It is based on the idea that if you invest a penny and double it every day for 30 days, you will have more than $5 million at the end of the month. This is because the interest earned on the original penny is added to the principal, and the new total is then used to calculate the next interest payment.
This process is repeated day by day and exponentially grows the humble penny by 53 billion percent!
Double a penny compounding chart
Blockers for doubling a penny for 30 days
Doubling your money in the stock market or crypto is very possible in one day. Maybe even a handful of days in a row if you bought the right thing at the right time. Forget about 30 days in a row.
Investments that can post 100% daily gains, consistently day after day, simply do not exist.
Remember, the higher the reward, the higher the risk that it'll all go to zero.
But it isn't just the lack of high-yield opportunities.
In the real world, another factor stopping you from doubling your money each day for 30 days is the cost of living. In other words, you'll want to take profits from your doubling penny well before day 30.
Let's say you got to day 10 or day 20 of this particular financial simulation. Around day 10, when the total amount is getting more substantial — or even life-changing — the temptation would then shift to derisking by taking profits from your penny-doubling portfolio. However, this slows your end result down.
Finally, if you had a real penny that doubled every day for 30 days, the tax man would stick his arm in to take millions away from you.