Compound Interest in Life vs. Compound Interest in Finance
Albert Einstein once called compound interest the eighth wonder of the world.
This was from a financial standpoint because of the way the money would add to itself over time and collect off its gains it was considered financial compound interest.
Every day we need to chip away at our craft a bit more here, a bit more there, and eventually end up with an enormous, profound sculpture. This is also compound interest.
To get everything you ever wanted, you must take advantage of compound interest. The compound interest I am speaking on is the compound interest of life.
This can apply to your finances, your relationships, all your results, successes, friend groups, business circles; you name it.
The way that your habits compound, day in and day out, is using the eighth wonder of the world in the most efficient way.
Choosing Which Habits of Yours Will Compound Into One Big Outcome
What this means is that the actions you choose to take daily determine where you are heading and how fast you’ll get there.
If you’re the type of person who has a consistent routine of working, reading, self-educating and masterminding with other successful individuals, I could predict that your outcome would consist of positive and very high, realized, goals.
If you stayed this type of person over a few years, you could take a trip somewhere and before you came back I would be expecting to hear an accumulation of things you’ve achieved since you left. I would have full confidence that you had progressed massively since our last visit.
On the other hand, if you’ve always been one to make excuses, be lazy and display apathy to achieving high goals and visions, I would be very confident when we parted ways, you would be doing more of the same the next time we spoke. That is, of course, unless you underwent a serious shift and radically changed your habits.
You see folks; this is where this wonder that is compound interest shows itself to us in a clear light.
People who set up healthy habits of the mind, body and work ethic, usually continue to consistently achieve great things and draw remarkable results into their lives.
People who set up destructive habits, complacent attitudes and victim mentalities are known to spiral down a consistent trajectory.
It’s not all that mind-boggling.
Why Take Responsibility For This? It’s Your Life After All
This is because of the compounding interest of each habit, choice and thought they choose to make. It is always up to the person making these helpful or unhelpful choices in their lives and many people simply aren’t careful with the kind of life they’re molding.
These habits and thoughts build and build on each other every hour, day and week. A small habit over time will turn into a big result; a small choice here and there will stack up and become a big outcome down the road. Just like in finances, a dollar or two will bring back a few more through compound interest. It works the same way.
This is why it’s so extremely important to take full responsibility for your life.
No one else will; that’s for sure.
So many people are creating the same life over and over by resisting necessary change. They also hold the same thoughts and beliefs that are limiting them and their success.
It’s up to you and no one else how your life turns out. So if you want to improve, make the tiny choices each day, over a long period of time, to build yourself and your future will be far better than you could have imagined.
It’s somewhat of a no-brainer, but you’d be surprised how many people don’t take advantage of the positive upside of compound interest, or perhaps unknowingly let themselves slip down a harmful path.
It’s not that they choose to be mediocre and unsuccessful; who would actively choose that? It’s more of a lack of direction and commitment that makes them stagnate.
This is why I say in the video that people seem to “wake up” 20 years later with a horrible body. A life they hate. A lazy group of friends. They never took into stock how each small habit added up to an enormous result, be it positive or negative.
When you look yourself in the mirror everyday, you can’t really see all the little changes that are constantly compounding. Ever notice when you’ve been away from someone for even a month, you can tell if they’ve gotten a haircut, darker skin, or gained a few?
Our responsibility as people who strive to improve and achieve is to be the best possible person we can be. We get to perfect our character and level up in this little video game reality we call life.
The collection of your body, mind and actions are the sum total of you. This conglomerate is your chess piece. You only get one! (As far as we know)
Make the best of it. Critique it. Perfect it.
You might not get another chance…
Everyday You Have a Choice
To make empowering and helpful decisions that push us towards what we want, or disempowering thoughts that don’t help us grow.
The choice is yours: what will you spend the majority of your time doing each day?
The thing is, most people don’t ever stick with things long enough to see fruits. The fruits will come, as long as the roots are solid and have been properly developed.
The Chinese bamboo plant takes four years to grow its roots solid and deep enough to have one small growth burst above ground. Four years! Then in six short weeks, it blasts up to over 90 feet tall. Does it grow in six weeks or four years?
This is the problem when people talk about “overnight successes”. This is such a laughable myth that it shouldn’t even still be brought up, but I must clarify for those of you who might have an inkling of it still in your mindset.
Almost never does a person put in a few hours of work or effort and then blow up within the week, month or year. It’s almost impossible! No, the people who are considered overnight successes have been grinding away at something in private that you just see the iceberg tip of. As British poet and hundred-millionaire Felix Dennis said:
This is a testament to how people that get successful and wealthy were nobodies for a very long period of time before they hit it big. It takes consistent action, bulletproof will, determination, and building an audience that will listen to what you’ve got to say.
This fact doesn’t disturb winners and truly driven people. It is only the universe sending tests to see which people really want what they want.
If you want serious success you must be alright with this. Nothing comes easy, and people need to deserve what they are after, or else they’ll never get there. I’m not sure about you, but I know I would much rather have it this way. I’d rather have compound interest working in my favor, than against me.
This is the way of needing to push to completion for any success. The way of the persistent grind and content production. The endless hours, that are spent beating on your craft.
We have these choices to make every day, and the earlier you start, the more you can get done. In life and in the a.m. Our simple choices that we choose to make in life add up over time to bring us what we’ve decided on.
Three 25 Year Olds Start Out in the Exact Same City, With Varying Attitudes and Strategies. How Does Compound Interest Play Out?
Let’s check out three examples to illustrate this idea. Three 25 year olds will start looking for what they want to do with their life on January 1. They each decide to start their own business.
Mike decides he’s going to look for his area of interest to choose a career. He spends a few hours a week casually thinking about it, lets seven months slide by before he really takes into serious consideration what he’s going to start on, and takes a few steps of action over the next week after this decision is reached.
He plays it safe, doesn’t risk anything, and works on his craft about 2-3 hours a day sporadically. This is if he can even sit down and work each day, because he does like to go out to the bar, and go to baseball games pretty often. He’s comfortable.
Josh decides what he thinks he should do with his life in about two months. He’s written his goals down, he has figured out a general direction that he would like to end up in 10 years, and he picks a path and gets started. He’s working a couple of hours most days and he’s learning something new a few times per week. He is reading a new book every couple of months.
He kind of wants it.
Chris has realized it’s time to get serious. It’s time to win.
Early in the first week of January, he gets his nose to the grindstone. He picks an idea that looks like it could help him closer to his pre-determined goals. He can’t see the huge picture up front, but he thinks this will get him ahead, because after all, he reasons that he needs some kind of start.
He picks up a course teaching him how to learn a new business model. He views this, and the other books he purchases for education, as a much needed learning investment.
He reads consistently at least one hour a day, and kills a minimum of two books a month. He gives this course his all, he works 12-16 hour days, he is thinking, living, breathing this material and developing himself. He puts off going out every weekend, because he knows he can party it up in the future if he chooses, when he’s actually accomplished something worthwhile.
He doesn’t have high payments, mortgages, or debt. He still focuses on moving his body and keeping in good shape with a great diet. Anything that isn’t helping him move towards his goal gets tossed to the side.
How do you think these three outcomes will play out? Hopefully you’re leaning towards Chris and thinking his decisions have gotten him a bit closer.
Let’s Fast-Forward Two Years Down the Road…
Mike has long since gone bankrupt, and still doesn’t know what hit him. He is blaming people left and right, complaining about his life, and has taken up a job that he hates to pay the bills and survive.
Josh has a business that has been working alright, but he’s needed to take a second job to supplement the incomes, because his work and learning were not matched at a fast enough rate to succeed.
Chris has a great start to his business, he’s consistently making high five figures in revenue per year, inching up to that 6 figure mark, and has a nice living provided from his business. He doesn’t have to work for anyone, because he’s hired employees to automate passive cash flow systems in his business.
His free time is still spent learning and growing, and he’s been able to do a bit of traveling. His focus in business is growing at a rapid rate, and he’s doing everything in his power to get it done.
Can you see how these compound effects have added up to create each person’s life?
The same is true for negative compound interest.
If someone sneaks in a piece of cake or a chocolate every day after dinner, it will add up to that extra belly fat you see on many people.
If one were to stop exercising with a weekly/daily plan, the results would start showing. Granted, not very quickly, but nonetheless.
Let’s Take a Peek at the Five Year Mark From January When They Were All 25…
Now each young man has turned 30 years old.
Mike is on welfare.
He never could take responsibility for what was going on and kept blaming and complaining to others. This has led him down a slippery slope that has gone nowhere. He had to move back into his parent’s house, for good. Until he is willing to take responsibility and make a change, nothing will go right for him.
Josh has upped his work ethic since the two year mark we last checked in on him, he’s been able to quit that job a good while ago, he still is working on building his empire for about six to eight hours a day, but is still somewhat inconsistent.
His type of compound interest is slow to progress.
He does like to party, enjoy life a bit by taking it easy, and not put too much pressure on himself. He lives in a large house with high payments on the lease that won’t let him be free until he decides to.
Chris has jumped in the last three years to over one million dollars in revenue, consistently, each year.
His compounding growth has become exponential with all he has done. He is living off of his passive income sources, various investments, and compound interest from trading accounts. He’s virtually retired, as his monthly income is far higher than his expenses.
However, the thought of stopping where he is now is just hilarious to him. He doesn’t want to live a retired life with no work; he’s still on a mission. Matter of fact, he feels he’s just getting started. He continues to build, grow, learn, and network his way to the top of his chosen industry.
Which Compound Interest Path Would You Like to Model?
After all, these scenarios are not unrealistic. As a matter of fact, you could do far more than this within five years or less, with the proper people, marketing, products, and strategy.
So who would you like to learn from? Are you reading and comparing your efforts to masters like Tony Robbins? Or Elon Musk, who simultaneously built three billion dollar enterprises, from the ground up? If you pay attention, you’ll see what type of compound interest actually works for success in your field.
The results from these people are phenomenal, but they do not happen overnight. Rome was not built in a day. Compound interest must be on your side. Bill Gates has a quote about this very thing as well:
So there you have it…
To use compound interest for the types of results and success you want to see, you must put in the work. It must be consistent; but you must also be patient.
When you’re consistently striving towards something, you must let compound interest do its work too.
But if you keep with it until it is achieved, you’ll get to where you want to go. My question for you is:
How are you spending your days?