How many times do I need to double my money to reach the moon?

The Power Of Compounding and Time

I have one $5 note.  It is the only thing in my stack of money.  One note.  Half a millimeter thick.  But this pile is going to double every day.  Tomorrow I will have two notes.  The next day four.

 

How many times would I need to double my pile until my pile reached the moon (384,000km away)?
 

The answer is 40.

 

Not 40 thousand.  Just 40.  This is because of the power of compounding and exponential growth over time.

 

Here is the proof:

How many doubles Millimeter KM
0 0.5 0.0000005
1 1 0.000001
2 2 0.000002
3 4 0.000004
4 8 0.000008
5 16 0.000016
6 32 0.000032
7 64 0.000064
8 128 0.000128
9 256 0.000256
10 512 0.000512
11 1024 0.001024
12 2048 0.002048
13 4096 0.004096
14 8192 0.008192
15 16384 0.016384
16 32768 0.032768
17 65536 0.065536
18 131072 0.131072
19 262144 0.262144
20 524288 0.524288
21 1048576 1.048576
22 2097152 2.097152
23 4194304 4.194304
24 8388608 8.388608
25 16777216 16.777216
26 33554432 33.554432
27 67108864 67.108864
28 134217728 134.21773
29 268435456 268.43546
30 536870912 536.87091
31 1073741824 1073.7418
32 2147483648 2147.4836
33 4294967296 4294.9673
34 8589934592 8589.9346
35 17179869184 17179.869
36 34359738368 34359.738
37 68719476736 68719.477
38 1.37439E+11 137438.95
39 2.74878E+11 274877.91
40 5.49756E+11 549755.81

Evolution has left us with a brain that is quite good at guestimating small liner maths – but sometimes it can be a struggle when it comes to a formula that includes ^ (to the power of).


So when you see something growing at 7% or 10% p.a. you might think this is not a big difference.  Over 40 years it can be huge.


If you had $100,000 in super and it grew at 10% not 7% for 30 years, you would have $1,700,000 rather than $760,000.  Almost a million dollars better off.


Big differences can result from such a small change in return and starting your journey with 20 years to retirement rather than 5. 

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