The Mustard Seed

rape-and-cottonwoodI have given many financial seminars where I start out with the story of two employees.. Each employee is giving the option of receiving $1,000 per day in wages for 28 days or starting with a penny and having their wage double each day.

Most people assume the $1,000 per day will be a much higher number, but lets review the numbers

  • After week one, employee # 1 have $7,000 in wages, employee # 2 will have a $1.27
  • At the end of week 2, employee # 1 is up to $14,000 in total wages, employee # 2 has $163.83
  • After three weeks, the two employees are almost equal. # 1 has $21,000, # 2 has $20,971.51
  • At the end, employee # 1 has earned $28,000. Not bad wages for a less than a month. However, # 2 has earned a total of $2,684,354.55.

Like the mustard seed that starts as a very small seed and grows into a large plant at maturity, the power of interest compounding starts small and over time becomes very powerful.

  • Principal
  • CliftonLarsonAllen
  • Yakima, Washington
  • 509-823-2920

Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Yakima, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. In fact, Paul drives a combine each summer for his cousins and that is what he considers a vacation.

Comments are closed.

Subscribe to Our Email List

* indicates required