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The compound interest is an operating system that runs your life, whether you know it or not. Every little action you take every day strengthens the compound.
It’s always working for better or for worse. You can decide now if you want it to bring you positive change or do nothing and succumb to negative changes.
Compound interest doesn’t just work on investments. Also, in any area that has measurable metrics. It is a phenomenon that comes with time and consistency.
Think for a second, about the first concept, time. It cannot exist without the second, consistency. This makes compound interest, as Einstein quotes it, “the eighth wonder of the world.”
Warren Buffett is, without a doubt, the richest investor in the world with a net worth of $96.3 billion.
There are over 2,000 related books on how Buffett built his fortune. Many are sensational, however, few of them focus on this detail. Buffett’s fortune isn’t just based on being a savvy investor. His fortune is because he is a great investor since he was 10 years old.
Thanks to that, by the time he turned 30, he had a net worth of $1 million, or $9.3 million adjusted for today’s inflation.
The skill of this man is smart investments, but the secret is time
None of the 2,000 books that speak of this man are titled. This gentleman has consistently invested for 75 years.
How does investing even works?
It all sounds nice, but hitting it big with an investment is usually one in a million, never to be repeated. Good investments mean having a small but decent return that can be consistently repeated over time. This is how the compound goes wild.
Think of it this way the next time you look at your bank account when saving. Every dollar you spend today costs you $5 in 20 years (because of the opportunity cost of not investing your money.)
Kobe Bryant is a basketball legend. His secret is that he always trained more than any other player in the League. In Kobe’s words “I had to rely more on skill, rely more on angles and study the game a lot more.”
I could write a separate article about this guy’s fascinating work ethic. But I’ll just say that Bryant’s obsession was with being 1% better every day.
Training 1% more each day would not generate any change for tomorrow’s game. However, it was significant in the long run.
This is how the math works:
If you can improve 1% every day for a year, you will become 37 times better. On the contrary, if you get worse by 1% every day for a year, you will decrease almost to zero.
At first, it doesn’t seem like there was a breakthrough. If you start to make a small change, today you will not notice the difference. You may not even notice it after a month, but this small change is compounded in the long run.
That’s Why it sounds ridiculous to read a page a day or do 10 minutes of workout. But at the end of the year, you can read a whole book and have done more than 60 hours of workouts. Compared to not doing anything.
Anyone can fall in love. Falling in love is easy. Staying in love is the real challenge.
I have always found it mesmerizing to see how there are people who have been married for more than 30 years. In my opinion, this achievement is one of pure resilience. Of course, compatibility, love, and empathy play a vital role.
If you have not been in any type of relationship or if they last relatively little, this number may not seem impressive to you.
This is the mind-blowing fact. The bank account of a millionaire who plays with compound interest for more than 30 years is impressive. But two people who have played with the same interest, in a different area, do not make the same impression.
Neither beauty nor intellect nor possessions define someone
The body is nothing more than a vessel for the soul. Similarly, the positions are not yours. Having luxuries does not tell you anything about the character of that person. Even if you are attracted to someone’s intellect, there is no guarantee that the result will be a serious bond.
These are characteristics that help you fall in love, however, they do not define the success of your relationship.
The intention of the “little details”
It is through the repeated actions of love that you keep the flame of the relationship active.
Just like dumbbell reps make your arm stronger, details of love build a strong relationship.
What are the “little details”?
Jay Shetty suggests some love exchanges in his book Think Like a Monk
six loving exchanges
- give with intention
- receive with gratitude
- Listen without judgment
- speak with vulnerability
- Prepare food selflessly
- Receive food with being on the present moment.
They can be so simple that you may not notice them. From serving your partner a cup of coffee every morning. To go out every weekend.
The dividends of these repeated actions are a lasting, loving, and growth-filled relationship.
Studies on human psychology show that spending money on experiences makes us happier than spending money on objects. Material things are exciting at first, but they depreciate in less than a year. The thrill of having a new phone is no longer the same as seeing the same phone 1 year later.
Compared to experiences, they compound and gain value over time.
The emotion caused by the first concert you went to, your first kiss, the trip to a new continent. All that you lived and you relive it years later through your memories.
Author Bill Perkins calls it “memory dividends.”
Just like investing money. If you invest in a new experience every month or every year, these compound and allow you to relive them.
Whether they are good or bad experiences, living them with our loved ones is what brings us happiness and purpose in our lives.
In the wise words of Carson, Downton Abbey’s butler, “The business of life is the acquisition of memories. In the end, that’s all there is.”
Matthew McConaughey is one of the most popular actors of the 21st century. He wrote the bestseller Greenlights. It’s a memoir book, from his childhood to the age of 50, which was when he published it.
What makes it so special is that he remembers specific details of his life.
He is a great storyteller, but remembering 50 years of life is a daunting task. My guess is that you don’t even remember what you had for breakfast two days ago.
The reason Matthew remembered his life so accurately is because he wrote in his diary every day since he was a child.
As David Perell says “when you write it’s like having conversations with your future self. Reading them years later is like having conversations with your past self.”
I don’t think Matthew made a plan at age 10 to document his entire life so he could publish a book 40 years later. Just like you, you don’t need a plan to start writing, whether it’s a diary, the notes of a book, a course, or a conversation.
What you write and learn is compounded over the years.
Reading a book without interacting with it will not generate any change in your life, your brain is fragile and forgetful.
Write down what you thought of the book, your ideas, and your experiences will remain and create a compound of knowledge.
As Marcus Aurelius wrote, “You don’t stand in the same river twice.” Referring to the fact that rivers live in constant change, just like you. You won’t be the same person reading your notes in the future and it won’t be the same idea either.
Because those ideas will nurture.
Do more of what already works
Instead of optimizing for the best routine or meal plan, do the things that already work for you. Don’t miss workouts, brush your teeth every day. Check your bank account, spend time with your partner, and write in your journal.
Do these essential tasks every day, not just when you have the time to do them.
Avoid small defeats
This is a concept called enhancement through subtraction. What i mean is that you avoid screwing up things that should already seem obvious to you.
For example
Education: Avoid Common Mistakes
Investments: Do not lose your money, avoid risks.
Exercise: Do not miss so many workouts.
Nutrition: Eat less junk food.
Measure your progress backward
Instead of measuring your progress based on your goals. Measure it with events in your life that have already happened.
For example
Lose weight: Measure your calorie intake. If your goal is to eat 2,500 calories, but yesterday you ate 3,400. Evaluate how you can eat 3,300 today.
Train: Last week you did 10 squats for 4 sets with 200lbs. Try to lift 210lbs today
Relationships: If you didn’t meet anyone new today. Try introducing yourself to a person today.
Having the ability to measure your progress in the areas of your life where you want to improve will revolutionize your life.
You become aware of your actions.
Tasks like working out, reading, meditating, spending more time with your family, or working on your side hustle. These are activities that you know you should do.
However, they do not demand your immediate attention. It’s normal, our nature is to get results now.
We are not willing to think in 5 or 10 years to get what we want.
The key point here is that you know that the compound is the power of the little things accumulated. As Aristotle says, “We are what we repeatedly do. EXCELLENCE, then, is not an act; it’s a habit.”
The purpose of this article is to make you aware that you are the captain of your ship.
I won’t tell you which direction to go. After reading this, add or remove changes in your life.
Let’s say the compound is like a permanent hangover if you’re not aware.
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