Compound interest is the key to unlock your success
One workout won’t make you Arnie. One tennis match won’t make you Serena Williams. One sale won’t make you rich.
Reaching the top is never really a one-off event. In my experience, whether in athletics or business, success takes countless contributions that add up over time and build on each other over years. Of course, this sounds like a lot of work. It’s supposed to, success takes nothing less. But something special takes place when you’re consistent with contributions towards your dream.
They don’t just add up, they work to multiply each other for better and better results.
When I first came across the principle of compound interest, I was enthralled. Not just from a financial perspective, where the results of it are so easily seen in things like investment accounts, but in all areas of life and personal development.
What is compound interest?
Simply? It’s interest on interest. Compound interest is when you take the gains you’ve made on your initial investment and put them back into the investment cycle. Instead of taking out what you’ve made, you reinvest it so that when the next interest kicks in, it comes from both the initial payment and the previous gain you made, combined.
Trust me, this is powerful stuff in the long run. Even with small, regular payments, the results can be spectacular over a long enough timeframe. The key is to see how these small contributions will lead you to your goal.
Compound interest in fitness
In weightlifting, progressive overload is key. Increasing the intensity of your training is what spurs your muscles to keep getting stronger. The obvious way to do this is to increase the poundage of what you’re lifting a little more than you did last week. Not by much, a couple of pounds maybe.
Now, on the surface this doesn’t seem like much when you just look at the individual session. But take that regular increase over the space of a year, five, ten…? You’re talking major kilos and lift numbers you can brag about. Your body takes these small, regular payments and compounds them in time to produce a big result, building on the strength you created last time.
Compound interest in entrepreneurship
Let’s say you’re an entrepreneur and your start-up is going well. In the coming years, you plan to expand into new regions and learning one of the local languages would put you ahead of your competitors.
If you started today, with just 30 minutes a day of language learning, that would give you over 180 hours of language learning under your belt in a year. An hour a day? 365. For a language like Spanish or French, the Foreign Service Institute puts time for proficiency at around 600 hours. You’d be halfway there. With a highly refined learning approach, you could be further than that.
Milestones and knock on effects
The exponential effect that comes from compounding is what produces those big successes in time. You only have to look back once in a while to see these milestones. A classic example is for those writing a book. 500 words a day isn’t much. But 5 days a week, that’s 2,500. 10,000 words in a month. Over 12 months that 120,000. You’ve got a serious book on your hands. Or if you’re blogging for your business, a ton of content.
When you stick with your small investments or as I call them, small wins, the multiplied gains in time will probably startle you. Because not only will you achieve the initial result you were after but you’ll find that these gains in one area have a massive knock on effect elsewhere in your life.
Learning to code for a few minutes every day will add up to mastery of one or more of the languages. Yet this is the minimum you’ll get from this investment. You’re now far more employable. You can take your coding ability to a range of industries and roles. You can even begin creating your own sites, products and applications. You can start your own business. All from a small daily payment.
Compound demands consistency and a clear goal
But to see the big results, you must be dedicated to the investment. That’s the crucial bit. For things to add up and multiply exponentially, you have to pay into the pot constantly. Whatever your goals are, in entrepreneurism, fitness or both, you need a sound investment plan that you know will pay off if you stick to it.
How to work compound interest into your life:
- Pick a powerful goal
- Know the result you want
- Do the math
- Model on the best
- Start now, don’t wait
- Make meaningful investments i.e. actions that pay
- Avoid bad investments i.e. procrastination and fake work
- Pay every day, even when you don’t feel like it
- Keep the faith and wait for the compound effect to kick in
- Increase the scale of contributions for better results
So, what are you going to do with the power of compound interest?
