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May 16, 2019 16:00:04

Compounding by @paras

by @OnepostersGems PATRON | 464 words | 🐣 | 169💌

200WaD Research Lab: Oneposters

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Jan 26, 2019 16:30:57 @paras 

"Do the routine and have faith in the magic of compounding to unveil itself gradually"

In one of his many pithy sayings, Einstein has remarked that the law of compounding is the eight's wonder of the world; one who understands it earns it and the one who doesn't pay it. For us mere mortals, on the first wave of thought compounding sounds like a very simple mathematical process. The small effort (or money) you put in every day starts to eventually build up momentum and provides higher and higher returns as the time goes on. There is nothing arcane or abstruse about it and rather sounds like a trite idea. And yet, we don't fully realize the potential of impact compounding can have in our lives, not just in the finances. Why does the phenomenon that was considered a worldly wonder by the smartest man in human history eludes the most of us?

The key reason why most of us fail to actualize compounding could just be human nature. Through evolution, we as species are wired to optimize for short term gain, prioritizing immediate security and well being. And it is inherently tough to have enough willpower to make sacrifices in the present so as to reap the benefits in the future. Most (sane) people would choose a guaranteed moderate outcome right now rather than a sliver of possibility of immense reward in the distant future. But what if this very characteristic of having an abnormally large reserve of willpower and patience is the single most important distinguisher of a successful person?

Investors, athletes, and successful entrepreneurs have known it all along. You make money by continually investing in your portfolio for decades. You become world-class sportsman by sticking to stringent training routines starting as a kid. Your business succeeds based on the learnings from all those failed ventures that you started. Seemingly, one stark trait among successful people is that they know the path to success lies in showing up every day and putting in the hard work even though there could be nothing to show for it for a long time. Do the routine and have faith in the magic of compounding to unveil itself gradually.

To be realistic it's more likely that a combination of a variety of variables accounts for success in any field. But it's hard to deny that truly understanding just how important compounding is and making it work for yourself is the key. No matter what the end goal might be, the best way to raise ourselves is to set a realistic bar and take incremental steps toward it every day. In other words, understand the law of compounding and put in the work required to lift your life to the heights of your dream.

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