Power of the Penny

A Million Dollars or The Power Of A Penny?

 “If a rich man offered to give you a gift of one million dollars today or one penny today, with a promise to double that penny the next day, then double the previous day’s pennies and so on for a month – which offer would you choose?”


My math teacher asked this question of our class back in the 70’s.  That was many years ago but I still remember the class unanimously agreed the million dollars was the way to go.  Of course being in math class we knew we were going to have to prove which offer was the better deal.


It certainly seemed like a million dollars should be more than a whole bunch of pennies.  A penny is worth hardly anything, after all it’s just one cent.  How could even a whole lot of pennies be anywhere near a million dollars?  We set out to prove we had made the right choice.  Here’s where the magic of compounded interest comes into play.


The Power Of The Penny

Penny Doubled Table

 Shiny Pennies


The Magic of Compound Interest

As you can see from the penny power table we definitely made the wrong choice.  With the power of duplication and compounding the little penny had become millions of dollars.  Of course you won’t get 100% daily interest on your money in real life but the lesson to be gleaned is about the ability of money to grow with time.  It’s also a story about having patience and not giving up before the big payday.


The penny a day plan illustrates that money, even a small amount, invested wisely, can turn into a whole lot of cash over time through the amazing power of compounding.  Compound interest has been called the eighth wonder of the world.  Albert Einstein said “Compound interest is one of the greatest mathematical concepts of our time”.


Start Saving Now and Turn Your Pocket Change Into Wealth!

Americans are pros at spending money, but definitely in the minor leagues when it comes to saving money.  The average savings rate for North Americans at the beginning of the 21st Century was close to zero.


An article from Kiplinger states when you’re young, you have an asset money can’t buy – TIME  The goal of a million dollar nest egg is far more possible through planned savings than the average person realizes.


Wealth building is about discipline, having a plan and growing the patience to stick to that plan until the goal is reached.  Even if you only have a small amount of money, don’t procrastinate, start now and watch your money grow and multiply over the months and years ahead.


The sooner you start the wealthier you can become.  Make savings a priority and make regular investments.  When you save or invest money in an account that offers compound interest be patient, it takes time to see the wonders of compounding returns.  It’s like a snowball rolling down hill… it’ll build on itself, getting bigger and bigger, before you know it, it’s a lot of money.  As you can see from our table the most growth comes at the end.  Invest wisely and leave your money alone.  Start now, you’ll be glad you did!

Shiny Pennies