Penny a Day Doubled for a Year
Nobody’s ever heard of a penny a day keeping the wolf away, but you can hear it now. Just compute a penny a day doubled for a year and you will stagger at the amount.
Starting with just one penny – or cent – for a year could make you rich. Can you become a millionaire?
You certainly could.
So the easiest thing would be the beginning: the penny. Or the cent. This is the humblest unit in the US currency pyramid.
It is such a small and underestimated coin that if you drop a cent in the dust, it wouldn’t even be picked up by anyone but your child - if you have one with you.
Or by a beggar, or a hawker, or trawler, if one happens to be passing by.
Yet, you need to value the cent. You see stores, banks or even houses stacked with boxes or trays of cents that fill you with happiness and make you feel prosperous.
And sure, they add up.
Penny Doubled Everyday for 30 Days
The humble penny has its uses and could help you a lot if it wanted to. So push your luck.
Do it. How much would you have if you doubled a penny for 30 days?
You can calculate a penny doubled everyday for 30 days in a simple manner. Your mind will begin to hum. This is what happens:
- Day 1: $.01
- Day 2: $.02
- Day 3: $.04
- Day 4: $.08
- Day 5: $.16
- Day 6: $.32
- Day 7: $.64
- Day 8: $1.28
- Day 9: $2.56
- Day 10: $5.12
- Day 11: $10.24
- Day 12: $20.48
- Day 13: $40.96
- Day 14: $81.92
- Day 15: $163.84
- Day 16: $327.68
- Day 17: $655.36
- Day 18: $1,310.72
- Day 19: $2,621.44
- Day 20: $5,242.88
- Day 21: $10,485.76 and so on…..
What exactly is wrong with the penny a day doubled formula explained above?
Nothing, really. Except that you are simply looking at the cent doubled as a simple amount, rather than a cumulative amount.
What exactly happens when you take the money doubled on the second day, and add it to the principal Cent collected?
You get a cumulative amount. This is what happens with another penny a day doubled formula. A penny a day doubled for a year can be checked for where it takes you.
Let’s just take the amount at the end of 10 days:
So see how much more than double the investment is the amount after 10 days? It’s all about lessons that you learnt in middle school.
One lesson was called calculating your compound interest, and there is no reason to believe that the name is different today, or that It’s changed the basic calculations in anyway.
Compound interest is pretty powerful. That is what a penny a day doubled for a year does.
Invest and Invent
The important point a lot of you would like to know is, whether a penny a day doubled for a year is really possible or not.
If you leave your money alone, it would just reproduce and multiply. That’s what getting Double Pennies is all about.
After two to three weeks, the principal would be big enough to give you a stroke.
There are some ways of working out how a penny a day works upwards with double pennies.
One way is to visit some roulette games and try to increase your piles of money. However, that might halve your penny, so better not to do it.
Here are some ways of going the double pennies route:
Begin with an investment in the stock market.
It gets back to you with about 10% annually. Hence, if you start with the ‘Magic Penny’ which magically translates to $20,000, after which you decide to forget all about it, then your money automatically doubles after every seven years.
That is the saga of pennies worth money.
So let’s say that you start at $20,000 when you are just 20 years old. In seven years, or 27, you get $40,000. So metaphorically, it’s all about a penny a day doubled for a year.
The entire table works out this way:
- After 20 years: $20,000
- 27 years later: $40,000
- Next, in your 34th year: $80,000
- What happens after you finish 41 years: $160,000
- In your 48th year: $320,000
- You are 55: $640,000
- And now you’ve reached your 62nd year: $1,280,000
Do you see how you’ve become the man with pennies worth money, building up from Magic Penny to Double Pennies?
However, just be careful that you study the markets before you take up the Penny a day challenge. Remember the 2008 crisis? When the markets were overbought, they wiped out a lot of companies.
You can also become who is popularly thought of as a ‘shark’ - a money lender! This is an option opened to you by Prosper or Lending Club.
That’s a great way too of letting your investment work for you instead of making you slog.
Check out some cool ways in which they help you to increase your investments. Look up their prospectuses, assess and understand the penny a day challenge involved in them and then make up your mind.
If you are wondering which one would be better, then just invest in both and watch how a penny a day doubled for a year.
This is a traditional scheme that helps you to double your investment. If you put some principal into your traditional 401(k) plan, your taxable income gets reduced, as you would need to meet the purpose of federal income taxes.
Secondly, you need to accept your boss’ matching contribution. It might be different in every company.
But in most firms, about 50% of the employee's contribution finds a match level, even though there would be a cap on your salary.
Hence, if you have contributed $1,000 to your 401(k) plan, you get back $500 as your employer’s contribution.
So if you put in some investment capital, the company’s matching amount can be that much more cheering. The investment for you would total $1500.
Finally, the even more gladdening news is that if you lower the starting point for your income.
The taxes too come down in comparison to whatever they would have been if you had not put in some sum to the 401(k).
For those of you who belong to the 25% marginal tax bracket, you get a quarter of the sum that you contribute throughout the years.
So do you see the good loop in this? While you pay your taxes like a good citizen, your contribution of $1000 is already not included as a taxable wage amount.
And if you are part of the 25% tax marginal tax bracket, you can automatically save yourself $250. So your $1,500 that came attached with the 401(k) actually cost just $750. Then a penny a day doubled for a year.
Penny a Day Doubled for A Year Summary
There is a lot more you can do now. You can put in your 401(k) funds to actually invest in mutual funds or exchange-traded funds.
One alternative that can help you would be less expensive investments in stocks, such as S&P Depository Receipts. This would help to track the S&P 500 index, which is part of the 500 largest publicly traded U.S. companies.
Its expense ratio would by a miniscule 0.09% expense. Hence, the Exchange Traded Fund as well as a number of S&P 500 index trackers help to get you good access and perception of the US markets.
Doesn’t that make you pile up your nest egg quickly?
Apart from stocks, you can invest in short-term assets that are more solid and certain. You would definitely be giving up the bigger potential of stocks, yet you can be assured that you get the money at the end of the investment.
Try out Vanguard's Short Term Bond ETF that invests in government bonds. The period that it takes to mature might be one to five years.
There is an expense ratio of 0.09%. Now the yield is only 1.12%, yet the risks are low. So you can feel safe about how a penny a day doubled for a year.
How does all that sound with the clink of your first penny – or cent? Definitely, you would no longer look down on your humble coin, but rest assured that a penny a day doubled for a year can really be great music.