Would you be better off if someone gave you $1 million today, or one penny that doubled every day for 30 days?

You’d be much richer with the penny.

In fact, the difference between the two choices is staggering. After doubling every day, 1 cent on Day 1 turns into over $5 million by Day 30.

Don’t believe me? Take a look…

Compound Interest Over 30 Days

Day 1

 $ 0.01

Day 11

 $      10.24

Day 21

 $      10,485.76

Day 2

 $ 0.02

Day 12

 $      20.48

Day 22

 $      20,971.52

Day 3

 $ 0.04

Day 13

 $      40.96

Day 23

 $      41,943.04

Day 4

 $ 0.08

Day 14

 $      81.92

Day 24

 $      83,886.08

Day 5

 $ 0.16

Day 15

 $    163.84

Day 25

 $    167,772.16

Day 6

 $ 0.32

Day 16

 $    327.68

Day 26

 $    335,544.32

Day 7

 $ 0.64

Day 17

 $    655.36

Day 27

 $    671,088.64

Day 8

 $ 1.28

Day 18

 $ 1,310.72

Day 28

 $ 1,342,177.28

Day 9

 $ 2.56

Day 19

 $ 2,621.44

Day 29

 $ 2,684,354.56

Day 10

 $ 5.12

Day 20

 $ 5,242.88

Day 30

 $ 5,368,709.12

It’s all about the power of compound interest – something we write about often in the Daily. Albert Einstein called it the eighth wonder of the world. Warren Buffett says it’s one reason he was able to amass such a huge fortune.

At Palm Beach Research Group, our mission is to make more millionaires over the next 12 months than any other financial newsletter. And compounding is one of the best ways to build wealth…

But there’s a catch. And today, I’ll tell you what it is…

Infinite Wealth Building

The key to compounding is to let it work over many years.

Just look at the chart below… It shows the value of an account growing at 10% per year over 60 years.

We call this the “hockey stick” chart, because the money grows slowly for several decades, then really picks up speed after about 40 years.

If you don’t interrupt it, compounding produces a fortune.

At 10% interest, it takes 40 years for $10,000 to grow into $411,000 (see the red arrow).

That’s pretty good. But do you see what happens next? The growth of the account explodes.

By year 50, it’s grown to just over $1 million.

By year 60, it’s grown to more than $3 million.

In short, the power of compounding is most effective when you let it work over many decades.

But as I hinted above, compounding isn’t as powerful as it used to be. The culprit: Central bankers.

The Fed’s War Against Compounding

Compounding works great when interest rates are high. But as Daily editor Teeka Tiwari points out, the Fed is slashing them to the bone.

It’s all part of the Fed’s war against savers. You see, every time there’s a recession, the Fed cuts rates, as it did after the 2007 financial crisis.

Here’s Teeka:

Many folks might not realize this… but from the early 1960s to 2007, the average interest paid on a 10-year government bond was 7%. Retiring with a snug nest egg took some time but it wasn’t impossible.

If you worked hard, put money away in a bond portfolio, and reinvested your interest, $100,000 in bonds would become worth $760,000 in 30 years.

All of that ended when the Federal Reserve decided to wage a “war” against declining stock prices in 2007.

In its frenzied efforts to save the stock market, the Fed cut interest rates to near zero. Then, it printed $3.6 trillion in new cash to buy back distressed bonds from its banker buddies.

This was not a victimless crime.

You – the American saver and future retiree  – got screwed.

How? Remember how a $100,000 bond portfolio would turn into $760,000?

Well, instead of making $660,000 in profits over 30 years, you’ll now make just $35,000 because rates are so low – a 95% reduction.

Now, you can still compound your money at low interest rates. But as Teeka points out, lower rates will dramatically reduce your nest egg.

To truly build long-lasting wealth, Teeka suggests in addition to compounding, you generate multiple, reliable streams of income.

And he lays out four steps to do so right here.

Now, if you’re looking to take some money off the table much more quickly than you can by compounding, Teeka has another strategy you can follow.

It’s a system that can help you take $12,000 per month in extra cash off the table – often in only a few days.

So you can take your original stake off the table… and simply roll your profits into each new investment, so you’re essentially playing with “house money.”

It’s a completely new way to compound. And Teeka has all the details right here


Chaka Ferguson
Managing Editor, Palm Beach Daily