The Most Important Idea in Life
Einstein called it the 8th wonder of the world.
Here’s a simple fact:
If something improves by just 1% a day, it will be 37 times better in a year.
That’s called Compounding.
Do you think you can get 1% better every day ?
Compounding can be applied to anything you want.
You can use it to achieve anything you desire.
Compounding is simply the act of getting a little smarter, richer, happier every day.
Only three things matter when you are trying to achieve something:
- How much closer are you getting daily, weekly, monthly ?
- How much time do you have ?
- Where are you starting ?
That’s all compounding is about.
The question for you is:
What are you consistently doing, what are you moving towards?
I’ve found in life, the most powerful equation is:
Consistently repeated actions + Time = Unconquerable Results
Successful people apply compounding to the three most important areas:
- Getting Smart
- Getting Happy
- Getting Rich
Try to go to bed just 1% smarter every day. Over time, those small increments add up. Before you know it you’ll be in top 5% in the world.
Learning follows a simple pattern:
Plant → Cultivate →Harvest
It’s the cultivation that takes time. That’s the 1% daily.
Five things to shoot for every day:
- Try to speak to one person smarter than you.
- Read 25 pages of a book — preferably one more than 10 years old.
- Do something you have been scared to do for years.
- Teach someone something you know.
- Read one newspaper everyday — yes, they are still useful.
Happiness is a state of mind with two critical components, what you believe and who you spend time with.
Your beliefs define who you are and how you act. It’s critical to compound them. They will literally determine your actions.
Relationships, just like learning are exponential. The right people and relationships will exponentially improve your life.
Ten things to shoot for every day:
- Each morning, write down three things you are grateful for. Be grateful when you wake up. Focus on all that you have.
- Journal for two mins a day about one positive experience you’ve had in the last twenty four hours.
- Meditate on your breath for 2 mins. Just breath and be silent.
- Do a random act of kindness over the course of each day.
- Exercise for fifteen minutes daily.
- Reach out to a friend you haven’t spoken to in a few months — and schedule a time to speak on the phone
- Try to talk to one new person every day — even if it’s 5 words.
- Introduce two people you know, who’d like meeting each other
- Schedule a breakfast, lunch or drinks with a person smarter or more powerful than you, that you’d love to learn from
- Find a small way everyday to share your experience and knowledge with others
When it comes to money and your wealth, you can’t start with the power of compounding early enough.
Look what it did for Warren Buffett.
What’s amazing about this chart isn’t what Buffett is worth at any time.
What’s powerful about this chart is that due to compounding, more than 93% of Buffett’s wealth was built after he was 60 !
It means that for you, 99% of your wealth is still ahead of you.
It doesn’t matter what you have right now. What matters is that you start. Begin.
Here’s some simple math:
If you save just $200 a month and do that for 30 years at a 5% interest rate, you will have over $167,000 at the end
That’s not bad for $200 a month (use this calculator to try out other options)
Five simple things to start:
- Open a savings or investing account.
- Start putting 10–15% salary aside as savings, no matter what you make.
- Go through your monthly spending and find $100 to cut out.
- Read four books about investing every year.
- Find one way every month to grow your income by a little: negotiate a raise, get more responsibility, start a side hustle or get a better paying job….
Compounding Is A Powerful Concept. Don’t Limit It.
What are you going to apply compounding to starting today ?
What are you committing to changing in your life, no matter what ?