You also have to consider that if anyone finds out about this magic doubling dollar, they will try to steal it.
If the government finds out, they might lock you up for counterfeiting. Only they can legally print money, it's not allowed to self-replicate. At the very least, they would seize and destroy it.
Within 50 years your magic dollar would destroy the economy. Matter of national security.
How much money do I really need long term? What I want to do is say bye-bye to the BS world of working for someone else and do what I want with my time. Plus a billion dollars is way beyond what I would need anyway.
Here's an interesting question - what amount of money needs to show up in a briefcase on your doorstep, all taxes paid (to keep it simple) for you to never work another day in your life.
For me, 6 million dollars. I'd pay off the rest of my mortgage and invest the rest/take a vacation (uses about a million), the other 5 million would would either sit in a high interest savings account or with dividend stocks with the goal of making 4.5% on it a year - that would pay me 225k a year. I really don't need more. Don't need to be "rich", just need freedom and my time.
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This is more difficult to answer. I'd probably still go with the million, since the equivalence is in around twenty years, when I'd be eighty & less likely to enjoy my fortune
I'm about half your age and would still take the million if it were tax-free.
Option B: $1 dollar today, $2 in a year, $4 in two years etc. You can spend the money and still be guaranteed the full amount the next year.
It will take 29 years for option 2 to catch up to option A, however after 39 years option 2 would yield approximately 1000x returns on option A, assuming it had not been invested.
Why would you assume that a sum of $1B would not be invested?
How much money do I really need long term? What I want to do is say bye-bye to the BS world of working for someone else and do what I want with my time. Plus a billion dollars is way beyond what I would need anyway.
Here's an interesting question - what amount of money needs to show up in a briefcase on your doorstep, all taxes paid (to keep it simple) for you to never work another day in your life.
For me, 6 million dollars. I'd pay off the rest of my mortgage and invest the rest/take a vacation (uses about a million), the other 5 million would would either sit in a high interest savings account or with dividend stocks with the goal of making 4.5% on it a year - that would pay me 225k a year. I really don't need more. Don't need to be "rich", just need freedom and my time.
In answer to your question, I think the cut-off point for me might be $2.5 mill. and I say that with the target of the 4% rule in which you can live off of the interest of your investment of 4% per year and the amount would be large enough to totally cover living expenses so that you never have to touch the principal.
Running the math, it would take the $2.5 mill. to yield $100k per year at a rate of 4% ROI, and I could live on $100k per year.
As for the problem posed by OP, I think most people would go for the $1 bill. up front (today), simply because 30 years to start yielding higher sums is too long to wait, but I wonder how many people would take the doubling per year if their was survivor benefits for a set number of years, like say 5 years.
I'm not sure why this got so many downvotes - it's a great question.
I'm 45, and at my age, 1 billion seems like the clear winner.
But even for someone who is a newborn, given 1 billion immediately, you could live comfortably off 50 million a year for the rest of your life. That's pretty amazing. And the mere existence of your doubling money in the other option might destabilize markets and cause the collapse of our currency.
Now, a million is a very different scenario. Most well-to-do Americans have a net worth in excess of 1 million by the time they're in their 40s. A million is very nice, of course, but it's not really a game changer. You still have to work. You won't get to retire that much sooner. I have enough saved now that if I knew I'd get 2 million in 21 years, I could retire today. So it would be a much harder call. Still, a bird in hand is worth a whole lot of birds in the bush.
I'd definitely take the doubling dollar over $500,000, and I'd definitely take $5 million over the doubling dollar. So my tipping point is somewhere between $500,000 and $5 million.
How much money do I really need long term? What I want to do is say bye-bye to the BS world of working for someone else and do what I want with my time. Plus a billion dollars is way beyond what I would need anyway.
Here's an interesting question - what amount of money needs to show up in a briefcase on your doorstep, all taxes paid (to keep it simple) for you to never work another day in your life.
For me, 6 million dollars. I'd pay off the rest of my mortgage and invest the rest/take a vacation (uses about a million), the other 5 million would would either sit in a high interest savings account or with dividend stocks with the goal of making 4.5% on it a year - that would pay me 225k a year. I really don't need more. Don't need to be "rich", just need freedom and my time.
6 million would be about right for my husband and I to both quit.
I think less would be enough. Not sure how much less though. We have three kids and lots of expenses but also lots of savings already for college / retirement expenses. More than 2 million. 3 maybe? 4 definitely.
I haven’t read the whole thread so hopefully someone’s already commented to this effect, but:
Why in the wide, wide world of sports would anyone at any age waste years/decades waiting for this to become “a smart investment” instead of taking the billion now and being able to utilize it during their prime AND until after they’re dead. A billion is more than enough; unless you’re some twisted sicko whose ultimate goal is to be among the wealthiest people alive for wealth’s sake, you take the billion now.
Option B: $1 dollar today, $2 in a year, $4 in two years etc. You can spend the money and still be guaranteed the full amount the next year.
It will take 29 years for option 2 to catch up to option A, however after 39 years option 2 would yield approximately 1000x returns on option A, assuming it had not been invested.
At my age...take the money today.
Even at a younger age, take the billion. At 1% interest, you end up with $133B in 29 years. At the end of year one you would have $10M off interest alone.
You also have to consider that if anyone finds out about this magic doubling dollar, they will try to steal it.
If the government finds out, they might lock you up for counterfeiting. Only they can legally print money, it's not allowed to self-replicate. At the very least, they would seize and destroy it.
Within 50 years your magic dollar would destroy the economy. Matter of national security.
Yes! This. If we're going to ask a ludicrous hypothetical that's really just a math problem, and pretend that it is somehow actually possible, then we also have to factor in that all the possible consequences are also real. This guy gets it. You would most likely be killed or die in some insane over-indulgence feat either way.
With a 1 billion dollar initial investment with no annual contributions, at an interest rate of 5% and an inflation rate of 3%, your 10-year growth looks like this.
You're earning $50 million in interest alone in that first year... (Source:
Free compound interest calculator to find the interest, final balance, and schedule using either a fixed initial investment and/or periodic contributions.