He’s got plenty of time, and doesn’t need that much seed money or that high a growth rate—unless Lucius has a plan that’ll get intolerable well before his payment comes due. I ran some numbers, and if he’s making 3% profit on each of one-third of all trading days for six years (which I think is if anything conservative—the arbitrage hack early in the story would be a couple orders of magnitude more profitable until someone catches on), he needs a principal of a little under 40 Galleons to break the 100,000 mark by the end of year 7. For 60,000, it’s more like 25.
That’s a decent amount of money if we’re going by the prices we’ve seen for goods, but I’d be surprised if he couldn’t borrow it from any of the suitably impressed adults he’s surrounded himself with. Especially if they’ve got a motive to screw the Malfoys over.
Upvoted for an essentially accurate analysis. However a minor nitpick: The marginal fees and resources involved will likely make this not very profitable if one started out with a small amount of money. So it would make more sense to start out with say at least a hundred Galleons or so. (Incidentally, why are Galleons capitalized? Is that convention? Other currencies like pounds, dollars and euros aren’t generally capitalized.)
It seems to be a convention of fiction. Lots of fictional terms are capitalized when real-world analogues are near-universally left lowercase. (Species names immediately come to mind.)
And for ridiculousness, have him start with a 100 million superlotto payout and get 5% instead of 3%. He’d have a couple hundred quadrillion dollars by the time he had to pay Lucius back. Obviously he couldn’t earn that much. Aside from that much money not existing, they’d shut down all trades well before he got to the first trillion dollars.
But still, it’d be amusing to have him with a giant mountain of gold equivalent to all the worlds combined reserves. “Lucius, you just grab that double-life-sized solid gold statue of myself. Don’t worry about the small change, I’ve got extra.”
Well, sure, that’s exponential growth for you. I’d actually rule out the scenario I present in the grandparent on narrative grounds: it’s not interesting from a plot or a rationalist perspective to be interrupted every chapter or two with a description of Harry’s latest trade, or even with his latest plan to wring another 5% out of his capital. (Maybe not that latter—Spice and Wolf pulled it off. But that’s a different kind of story.) Point is, this doesn’t need to be attention-getting in or out of story, just repeatable. There are boring options that would work (day trading with a Time-Turner being only the first to come to mind). Since that’s an unstable state for a story and the debt could easily have been omitted, at this point I’m waiting for the other shoe to drop.
I’m not expecting that shoe to come in the form of unexpected changes to the financial structure that the early chapters set up, though. That does paint the Wizengamot in a rather unflattering light, but these are people that have only the vaguest idea of what cars are—an enormous blind spot concerning the Muggle world is quite consistent with the established culture.
He’s got plenty of time, and doesn’t need that much seed money or that high a growth rate—unless Lucius has a plan that’ll get intolerable well before his payment comes due. I ran some numbers, and if he’s making 3% profit on each of one-third of all trading days for six years (which I think is if anything conservative—the arbitrage hack early in the story would be a couple orders of magnitude more profitable until someone catches on), he needs a principal of a little under 40 Galleons to break the 100,000 mark by the end of year 7. For 60,000, it’s more like 25.
That’s a decent amount of money if we’re going by the prices we’ve seen for goods, but I’d be surprised if he couldn’t borrow it from any of the suitably impressed adults he’s surrounded himself with. Especially if they’ve got a motive to screw the Malfoys over.
Note that Harry secretly buried 100 Galleons in the backyard of his parents’ house back in chapter 36, so having seed money is not an issue.
Upvoted for an essentially accurate analysis. However a minor nitpick: The marginal fees and resources involved will likely make this not very profitable if one started out with a small amount of money. So it would make more sense to start out with say at least a hundred Galleons or so. (Incidentally, why are Galleons capitalized? Is that convention? Other currencies like pounds, dollars and euros aren’t generally capitalized.)
It seems to be a convention of fiction. Lots of fictional terms are capitalized when real-world analogues are near-universally left lowercase. (Species names immediately come to mind.)
The coin names are capitalized in the Potter books, yeah. Don’t know why.
And for ridiculousness, have him start with a 100 million superlotto payout and get 5% instead of 3%. He’d have a couple hundred quadrillion dollars by the time he had to pay Lucius back. Obviously he couldn’t earn that much. Aside from that much money not existing, they’d shut down all trades well before he got to the first trillion dollars.
But still, it’d be amusing to have him with a giant mountain of gold equivalent to all the worlds combined reserves. “Lucius, you just grab that double-life-sized solid gold statue of myself. Don’t worry about the small change, I’ve got extra.”
Well, sure, that’s exponential growth for you. I’d actually rule out the scenario I present in the grandparent on narrative grounds: it’s not interesting from a plot or a rationalist perspective to be interrupted every chapter or two with a description of Harry’s latest trade, or even with his latest plan to wring another 5% out of his capital. (Maybe not that latter—Spice and Wolf pulled it off. But that’s a different kind of story.) Point is, this doesn’t need to be attention-getting in or out of story, just repeatable. There are boring options that would work (day trading with a Time-Turner being only the first to come to mind). Since that’s an unstable state for a story and the debt could easily have been omitted, at this point I’m waiting for the other shoe to drop.
I’m not expecting that shoe to come in the form of unexpected changes to the financial structure that the early chapters set up, though. That does paint the Wizengamot in a rather unflattering light, but these are people that have only the vaguest idea of what cars are—an enormous blind spot concerning the Muggle world is quite consistent with the established culture.