If you had invested 0.01 of a dollar at the time of the birth of Jesus,
with a compound interest of 5%, it would have a value today
of the number of pure gold balls, each the size of the Earth, shown below:
Don't believe it?
No need to use a formula, with a simple
trick you can mentally reconstruct the
exponential nature of compound interest.
Take one cent:
A cent doubles every 15 years with a 5%
interest rate, making 2 cents.
That means that every fifteen years your
assets double, this gives:
30 years: 4 cents
45 years: 8 cents
60 years: 16 cents
75 years: 32 cents
90 years: 64 cents
105 years: 128 cents
135 years: 512 cents
150 years: 1000 cents
(figures have been rounded for simplicity)
So we can see that every 150 years there is
a thousand-fold increase in cents, and a
further 150 years there will be another
thousand-fold increase, making a total of
one million cents.
The equation is simple:
150 years: one thousand cents
300 years: one million cents
450 years: one billion cents
600 years: one trillion cents
After 600 years you will have 10 billion
dollars in your bank account,
and that's not bad is it?
And after another 600 years? Simple, just
multiply by a factor of one trillion.
That is 10 billion trillion dollars after 1200
years.
And after 1800 years: 10 billion trillion
trillion.
Or in gold terms, 312 trillion trillion tons,
equal to 52 times the weight of the Earth.
And in another 150 years it will be 52,000
times the weight of the Earth, and so on,
and so on . . .
This is how
Asset growth of 0.01 dollar invested with a 5%
compound interest rate:
By years in dollars:
15: 0.02
30: 0.04
70: 0.30
150: 15.07
200: 172.92
250: 1983
378: 1,022,245 (over a million dollars)
500: Over 39 billion (and a few cents :)
Now take a ton of gold with a price of 32,000 dollars
per kilo:
500: 12
600: 1615
800: 27,944,045
1000: 483,224,662,728
1200: 8,356,201,532,115,367
1400: 144,500,290,301,869,906,250
1618: The gold is now heavier than the weight of the
Earth.
(The Earth weighs 6 million trillion tons)
1653: 5.5 times more than the weight of the Earth, or
a gold ball the same size as the Earth.
And now the equivalent of Earth sized gold balls:
1800: 1309 gold balls.
2000: 22,643,013 gold balls.
2015: 47,073,198 gold balls.
And that makes
9,038,054,016,000,000,000,000,000,000,000,000,000,00
0 dollars.
Or more than 9 billion trillion trillion dollars.
Divided among 7.5 billion people this would give
every one of
them one million trillion trillion dollars.
That would even make Bill Gates green with envy.....
'It is well that people of the nation do not understand our banking and monetary system, for if they did,
I believe there would be a revolution before tomorrow morning.' (Henry Ford)