$1M or a Penny That Doubles For 30 Days?

Last week, my 10-year-old son, Cooper, asked me a thought-provoking question: would I rather have $1 million today or a penny that doubles every day for the next thirty days? Cooper already knew the right choice, he’d stumbled upon the question on a YouTube video, but he was surprised when I went all-in on the doubling penny. I suppose he thought I’d let my desire for immediate gratification get the best of me, but I was betting big on the power of compounding. It was a smart bet, after all, I had some great minds on my side.

Albert Einstein famously hailed compounding as “one of the most powerful forces in the universe.” Charlie Munger, Warren Buffett’s long-time business partner, deemed compound interest “one of the most important models there is on earth.” And Jim Rogers, the legendary investor, described compounding as nothing short of “the magic of investing.” With such formidable endorsements, how could I choose otherwise?

I knew I was making a smart decision; however I couldn’t help but crunch the numbers to see just how much of a windfall I’d snag with the doubling penny. Honestly, I thought it might be a close match, but let’s just say that the results were eye-poppingly astonishing.

Day 1: $0.01 The journey begins with a single penny.

Day 2: $0.02 With each passing day, the penny’s value doubles. .

Day 3: $0.04 As the compounding effect takes hold, the penny’s growth becomes more pronounced.

Day 4: $0.08 In just four days, its value has doubled four times, showcasing the power of compounding.

Day 5: $0.16 With each doubling, the penny’s growth accelerates.

Day 6: $0.32 In just six days, its value has multiplied exponentially, demonstrating the remarkable potential of compounding.

Day 7: $0.64 As the days progress, the penny’s growth shows no signs of slowing down.

Day 8: $1.28 

Day 9: $2.56 

Day 10: $5.12 As the penny reaches its tenth day, its value surpasses five dollars.

Day 11: $10.24 

Day 12: $20.48 

Day 13: $40.96 

Day 14: $81.92 

Day 15: $163.84 Only $163 bucks. Did I make the right choice here?

Day 16: $327.68 

Day 17: $655.36 

Day 18: $1,310.72 

Day 19: $2,621.44 Amazing growth but I’m starting to feel a bit nervous.

Day 20: $5,242.88

Day 21: $10,485.76

Day 22: $20,971.52

Day 23: $41,943.04 Ok. $40k is a lot of money, but it’s nowhere near the $1M I passed on 23 days ago.

Day 24: $83,886.08

Day 25: $167,772.16 

Day 26: $335,544.32 Now we’re talking!

Day 27: $671,088.64 Now this is some big bucks.

Day 28: $1,342,177.28 Over one million dollars!

Day 29: $2,684,354.56 Wow!

Day 30: $5,368,709.12 Finally, on the thirtieth day, the penny’s value doubles one last time, surpassing the five-million-dollar mark. An unbelievable journey from a single penny to over five million dollars in just 30 days!.

Now, if that isn’t a testament to the incredible power of compounding, I don’t know what is. Sitting tight while my penny silently compounded, I prevailed with a staggering $4,300,000 windfall. It reminds me of the “sensible investing” part of our mission statement here at Beacon. A large part of our investment philosophy involves minimizing investment costs, taxes, timing errors, and emotional mistakes so your portfolio can take advantage of “one of the most powerful forces in the universe” as efficiently as possible. In other words, as Charlie Munger also said, ‘the first rule of compounding: never interrupt it unnecessarily’.

Real Planning. Sensible Investing. Meaningful Advice. So money can be a blessing.

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The content above is for informational and educational purposes only. The links and graphs are being provided as a convenience; they do not constitute an endorsement or an approval by Beacon Wealthcare, nor does Beacon guarantee the accuracy of the information.

Geoff Hall, CFP®
[email protected]

My wife, Crystal, and I have been married for 11 years and have two kids, Cooper (10) and Rhodes (8.) When I’m not spending time with them you might find me downtown serving at our church, pushing my limits during a mountain bike ride or having coffee with a friend in the Five Points area. I've been a financial advisor for 29 years and I'm thankful for the privilege of shepherding my family of clients through the ups and down of the markets, and of life for that matter.