Join Australia's most dynamic and respected property investment community

What would you rather

Discussion in 'Investor Psychology' started by Big Will, 30th Oct, 2015.

?

Your Choice

  1. 1 Cent per day

  2. $5 million

Results are only viewable after voting.
  1. Big Will

    Big Will Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,566
    Location:
    Melbourne, Australia
    Please vote and not comment any further than your choice but not the reason.

    Scenario - If you were given a choice to receive five million dollars in one month or a cent and I doubled it every day for 30 days which one would you choose?
     
    Last edited: 30th Oct, 2015
    Gockie likes this.
  2. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

    Joined:
    18th Jun, 2015
    Posts:
    9,002
    Location:
    Sydney
    Have you been reading the "slight edge"?
     
  3. Big Will

    Big Will Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,566
    Location:
    Melbourne, Australia
    Terry_w likes this.
  4. juzzy

    juzzy Well-Known Member

    Joined:
    14th Aug, 2015
    Posts:
    156
    Location:
    Melbourne
    Interesting experiment!
     
    Last edited: 30th Oct, 2015
  5. Big Will

    Big Will Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,566
    Location:
    Melbourne, Australia
     
  6. TMNT

    TMNT Well-Known Member

    Joined:
    23rd Jul, 2015
    Posts:
    1,397
    Location:
    Melbourne
  7. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    1,516
    Location:
    Sydney
    Without doing the calcs, 1 cent for sure.
    This has been referenced to many times as a way of displaying the power of compounding.
     
  8. inertia

    inertia Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    289
    Location:
    Newcastle, NSW
    What's that parable about the grains of rice and a chess board?
     
    retire@45 likes this.
  9. THX

    THX Well-Known Member

    Joined:
    24th Jul, 2015
    Posts:
    869
    Location:
    Sydney
    2E63
     
  10. euro73

    euro73 Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    1,438
    Location:
    Sydney
    $5 million.

    I understand the power of compound, and the text book result from $1 per day , compounding may win out, but it would take years to catch up, and bills need to be paid, y'know.....$5million is more than most people will earn from 40 working years. having that as a lump sum is a no brainer.

    Reinvested at just 3% returns, it's 150K income for life without even touching the capital. 4% is 200K. 5% is 250K. In other words, over 20 years, with 5% returns, the real worth is $10 Million.

    And I think you could do quite a bit better than 5%.
     
  11. THX

    THX Well-Known Member

    Joined:
    24th Jul, 2015
    Posts:
    869
    Location:
    Sydney
    I think the more interesting question is could you do more having the cash upfront at day 1 as opposed to waiting 30 days for your pennies to add up :D
     
  12. Dan Donoghue

    Dan Donoghue Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    646
    Location:
    Sydney, NSW
    It's a bit like the old grain of rice doubled on each part of a chess board, I would take the 1c, the difference would not actually be that much though with it being only 30 days.

    Everyone posting about taking the lump sum and investing, the period is only 30 days, how much money will you make from your 5 mill in 30 days?
     
  13. GreatPig

    GreatPig Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    153
    Location:
    Sydney
    Or 29 days. 100% per day is pretty good compounding!

    GP
     
  14. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    4,930
    Location:
    Sydney
    I have the patience to wait 30 days for my huge payout.
     

    Attached Files:

    Xenia likes this.
  15. Dan Donoghue

    Dan Donoghue Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    646
    Location:
    Sydney, NSW
    Just ran some calcs on this and the difference in favour of the 1C is 7.37%, sounds low but that is over a 30 day period, this nets out to an annual growth of 89.72%

    It's pretty huge :)
     
    Blacky likes this.
  16. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    4,930
    Location:
    Sydney
    If you work with the question in the first post... but the poll question doesnt say anything about doubling though.
     
  17. Blacky

    Blacky Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    1,104
    Location:
    Bali
    1c/day doubled for 30days = $5,360,000

    Unless my maths is wrong.

    I doubt you could generate 7%+ in the first month.
     
  18. THX

    THX Well-Known Member

    Joined:
    24th Jul, 2015
    Posts:
    869
    Location:
    Sydney
    So really all those 1 centers only have 30 cents based on the poll question :D
     
    Dan Donoghue likes this.
  19. THX

    THX Well-Known Member

    Joined:
    24th Jul, 2015
    Posts:
    869
    Location:
    Sydney
    Since you've blabbed the answer; $5,368,709.12. It's not really that much of a difference. Should have made it 31 days, that is more mind blowing.
     
    Blacky likes this.
  20. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

    Joined:
    18th Jun, 2015
    Posts:
    4,930
    Location:
    Sydney
    Yep!