Here's an exercise I learned years ago from one of my rich mentors:
THE STORY:
During the depression, an out of work man was given an apple by a kindly storekeeper to survive.
Instead of eating the apple, he sold it for 2 cents.
With that 2 cents, he walked back to the apple merchant the next day and bought 2 apples (the merchant was on a side street, and his apples were cheaper than those on the main avenues).
The man again went and sold these two apples for 2 cents each, and bought 4 apples with the proceeds the following day.
Assuming he does this every day, how long does it take the man to become a millionaire? How long until he' s worth $10,000,000? A billion?
Here goes:
Net worth at the end of:
Day 1: .02
Day 2: .04
Day 3: .08
Day 4: .16
Day 5: .32
Day 6: .64
Day 7: 1.28
Day 8: 2.56
Day 9: 5.12
Day 10: 10.24
Day 11: 20.48
Day 12: 40.96
Day 13: 81.92
Day 14: 163.84
Day 15: 327.68
Day 16: 655.36
Day 17: 1310.72
Day 18: 2621.44
Day 19: 5242.88
Day 20: 10,485.76
Day 21: 20,971.52
Day 22: 41,943.04
Day 23: 83,886.08
Day 24: 167,772.16
Day 25: 335,544.32
Day 26: 671,088.64
Day 27: $1,342,177.20
Answer: If he can double his money selling apples each day, he will be a millionaire in less than a month.
Day 27: 1,342,177.20
Day 28: 2,684,354.40
Day 29: 5,368,708.80
Day 30: $10,737,417.60
Answer: If he can double his money each day selling apples, he will be worth over $10,000,000 in 30 days.
Let's see what happens in just one more week:
(rounding up from here on out):
Day 31: 21,474,834.
Day 32: 42,949,668.
Day 33: 85,889,336.
Day 34: 171,798,672.
Day 35: 343,597,344.
Day 36: 687,194,688.
Day 37: $1,374,389,376.
A BILLIONAIRE in just 37 days!!!
*********
OK, so here we go:
1. What, specifically, are the flaws in this exercise?
2. How do these flaws relate to what your average Joe or Jane hears when they meet with their financial planner? Or for the average young buck planning to double their income every year?
3. How many real world examples can you find of sales doubling OVER AND OVER? It doesn't have to be each day-- For instance, try to find an industry that doubles its sales each year, for 37 years.
Feel free to add any additional observations or ideas you get while looking at the above exercise.
-Russ H.
PS I lied. The above exercise takes more than 5 weeks (2 days more).
THE STORY:
During the depression, an out of work man was given an apple by a kindly storekeeper to survive.
Instead of eating the apple, he sold it for 2 cents.
With that 2 cents, he walked back to the apple merchant the next day and bought 2 apples (the merchant was on a side street, and his apples were cheaper than those on the main avenues).
The man again went and sold these two apples for 2 cents each, and bought 4 apples with the proceeds the following day.
Assuming he does this every day, how long does it take the man to become a millionaire? How long until he' s worth $10,000,000? A billion?
Here goes:
Net worth at the end of:
Day 1: .02
Day 2: .04
Day 3: .08
Day 4: .16
Day 5: .32
Day 6: .64
Day 7: 1.28
Day 8: 2.56
Day 9: 5.12
Day 10: 10.24
Day 11: 20.48
Day 12: 40.96
Day 13: 81.92
Day 14: 163.84
Day 15: 327.68
Day 16: 655.36
Day 17: 1310.72
Day 18: 2621.44
Day 19: 5242.88
Day 20: 10,485.76
Day 21: 20,971.52
Day 22: 41,943.04
Day 23: 83,886.08
Day 24: 167,772.16
Day 25: 335,544.32
Day 26: 671,088.64
Day 27: $1,342,177.20
Answer: If he can double his money selling apples each day, he will be a millionaire in less than a month.
Day 27: 1,342,177.20
Day 28: 2,684,354.40
Day 29: 5,368,708.80
Day 30: $10,737,417.60
Answer: If he can double his money each day selling apples, he will be worth over $10,000,000 in 30 days.
Let's see what happens in just one more week:
(rounding up from here on out):
Day 31: 21,474,834.
Day 32: 42,949,668.
Day 33: 85,889,336.
Day 34: 171,798,672.
Day 35: 343,597,344.
Day 36: 687,194,688.
Day 37: $1,374,389,376.
A BILLIONAIRE in just 37 days!!!
*********
OK, so here we go:
1. What, specifically, are the flaws in this exercise?
2. How do these flaws relate to what your average Joe or Jane hears when they meet with their financial planner? Or for the average young buck planning to double their income every year?
3. How many real world examples can you find of sales doubling OVER AND OVER? It doesn't have to be each day-- For instance, try to find an industry that doubles its sales each year, for 37 years.
Feel free to add any additional observations or ideas you get while looking at the above exercise.
-Russ H.
PS I lied. The above exercise takes more than 5 weeks (2 days more).
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