How much is interest on a trillion dollars, anyway?
Yesterday I did some number freaking on the subject of one trillion dollars.
Today I want to expand that a little further, to show how truly massive that number is.
One of the things we discussed yesterday was that you could have spent $1 million every single day since Jesus was born, and still not have spent $1 trillion. That statement ignores the compounding of interest, however.
So, let’s add interest the equation. Pretend you were given $1 trillion on the date of Jesus’ birth, which we will say was 733,500 days ago. This money was put into a bank account that paid 6% per year. How much could you have withdrawn every day since then? Before you read on, please try to formulate a guess, so you can see how close you are.
I will even reproduce my little picture of $1 trillion so that you don’t accidentally read ahead.
Are you ready for the answer? It is $164,383,561.6438 per day! Interestingly enough, if you just round up to $164,383,561.65 you will end up running out of money after 400 years, and if you round down to $164,383,561.64 your nest egg will actually grow over time. That extra fraction of a penny makes a huge difference over 2000+ years.
What could you buy with $164 million per day? You could buy everyone in the country a $.50 newspaper and still have $10 million left every day.
You could sign A-Rod to a 6 year contract, every single day, and still have a couple million left.
You could pay the annual salary of any major league baseball team not named the Yankees, every single day.
The $164 million represents interest on the $1 trillion. But, even just the interest on the interest is $27,000 per day. So, if you took one day off from spending, and put that money in a separate account, and it earned interest at 6% per year, you could hire an entry level accountant for 6 months, with the interest on the interest every single day.
I think this is an amazing example of the power of compound interest, and tomorrow I will share an even better one with you.
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Image: http://vandinther.googlepages.com/Trillion.jpg
Google earth view: http://vandinther.googlepages.com/OneTrillionDollarscoverWashington.kmz