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Is it easier to double $1 than it is to double $500?

Discussion in 'General Chat' started by So_Cynical, Jun 29, 2013.

  1. So_Cynical

    So_Cynical The Contrarian Averager

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    The question: Is it easier to double $1 than it is to double $500? and if so does that hold true for $500 compared to $5000? and $500.000 to 5 million?

    I understand that you can just walk up to a stranger and ask for $1 and have a chance of success but have almost no chance asking for $500 or even $50.
     
  2. cynic

    cynic

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    A simple mental exercise of considering extremes suggests that the smaller sums are far easier to double. (Recently a friend of mine managed to triple the balance of one of his microtrading accounts. He'd somehow turned a balance of 0.03 AUD into 0.09 AUD - Wow!!! Try to imagine the impact on the economy of achieving a similar return with a 300 billion AUD account! One would surely agree that the world would have trouble accommodating such an endeavour.)

    If one were to assume a finite monetary supply (as opposed to the seemingly infinite one the world is displaying at present) then one could readily conclude that anyone in possession of more than 50% would be incapable of doubling such a sum without redefining the monetary supply. Conversely, someone in possession of a significantly lower sum will likely find a wider range of sufficiently liquid opportunites that could accommodate greater scalability within their investment approach.
     
  3. galumay

    galumay learner

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    I reckon money makes money and the more you have the easier it is to make a higher return. I get your point about asking people for money, but as you point out it only works for very small amounts.

    A quick example that comes to mind is I know of a commercial property for sale for $2.3m, its mainly leased long term by government departments and the other leases are also long term, its returning over 14% net - about 5 years to double your money. Trouble is I don't have a lazy $700K for the deposit!
     
  4. Gringotts Bank

    Gringotts Bank

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    Some guy once traded his way from a paper clip to a house. On youtube i think.
     
  5. WilkensOne

    WilkensOne

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    Yeah it was an interesting story.

    http://oneredpaperclip.blogspot.com.au

    There is the blog for those interested.
     
  6. McLovin

    McLovin

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    14% net? Where? There's a lot of wholesale investing options once you have a decent sized bank. I have a couple outside the market that are returning +20%.
     
  7. trillionaire#1

    trillionaire#1

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    Walk over a thin beam an inch above the ground,easy.
    Now walk over the same beam placed between two skyscrapers,:eek:

    I think fear and self doubt multiply with every foot higher,or in our case every extra dollar invested:2twocents
     
    AlwaysBeClosing likes this.
  8. bellenuit

    bellenuit

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    If you limit your means of doubling to investing only, it becomes a more interesting question, otherwise we could simply add to the original amount money obtained from begging (for very small amounts) and from working (medium amounts).

    I would think it easier to double from investing as the amount increases, but then it becomes more difficult above a certain amount (law of diminishing returns).

    For small amounts your range of investment options is severely limited, perhaps to banks accounts and a small amount of shares. However, transaction costs will eat up a lot of the earnings.

    As the amount of money increases, your range of potential investments increases allowing you to invest in projects that are more lucrative (property development at the right time). Transaction costs as a proportion of the amount invested tend to decrease. If you are a skilful investor able to pick the most lucrative investments available (which I will call tier 1 investments), then your ability to double your money is a lot easier.

    For very very large amounts there may not be enough tier 1 investments available to absorb all your funds, so you may be forced to look at tier 2 and lower to ensure all your funds are working for you. Your average return will start to fall, making it harder to double your money. However, I think we are talking about multi billion dollar amounts before we reach that stage.

    I am assuming only lawful investments that are done without resorting to bribery and corruption.
     
  9. Julia

    Julia In Memoriam

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    Is there supposed to be a connection between your two questions?

    Begging on the street for a small amount of money bears no relation to investing larger amounts .

    I agree with galumay that the cliche of 'money makes money' is true. Much easier to make more from more, but up to a certain point as bellenuit has described.
     
  10. Sdajii

    Sdajii Sdaji

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    I'd find it difficult to invest $1 in anything (making a dollar is easy, but investing a dollar in anything other than a casino game is very difficult). Anything under $1,000 is tricky to invest in any particularly useful way. Above that you have a few options. Above $5,000-10,000 you could start setting up some small businesses from home. Over about $100,000 you could set up something a bit more interesting. Over about $500,000 your options considerably expand again.

    Once you get over about $1-2million you can really start sinking your teeth into some serious business projects, property development, etc. etc.

    Get a few billion dollars and you could do some things I've never even thought about.

    Get a few trillion dollars and your options would become a bit limited in a way - you can't exactly buy one country and then get two countries, but I've never really entertained the thought.

    Get a few quadrillion dollars and you probably own so much money there's not a meaningful amount left for everyone else and people stop using money as currency.
     
  11. skyQuake

    skyQuake

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    In terms of trading its a lot easier to make large %gains with small accts compared to large accts. Liquidity being the main factor.
    As you get bigger slippage and volume become more and more important. Imagine a punter with $5k buying a 10c micro cap stock, vs a super fund trying to shove $50mil at it.

    As for other avenues of investing, eg property, commercial deals etc I think largeness brings about more options, but not necessarily better opportunities. :2twocents
     
  12. ROE

    ROE

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    The thing with large amount of cash is like the other said with the beam ...
    you could potentially lose a lot more money so you are more conservative in your investment.

    you can lose a couple K and write it off and can make it back pretty quick
    Start to lose 100K in large position you start to feel the pain :)

    My own personal experience ... I trades with 25K parcel for a long time and
    my portfolio capital is now triple I still haven't got over that barrier easily I always said

    hmm 75K or 50K position a bit risky but 25K I dont even think about it :)

    Logic is I just move up in relation to the portfolio size and I am trying hard to get over the psychology barrier
     
  13. skc

    skc Goldmember

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    I have been facing this in the last few months... and I found a few methods helped.

    1. I back calculated all these trades that I did and see what my P&L would be had I simply gone full size. That way you get to see that even though losses become larger, they are more than covered by the profits you would have made had you simply gone full size.

    2. I take the $ amount P&L off my screen and only look at the % change.

    3. I increased my position gradually over 10 weeks.
     
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