Compounding is a simple and powerful concept.
A $100 saving compounded at 10% per month gives us $110 in month 1.
In month 2, compounding doesn’t just give us $10. It also gives us 10% of the $10 we earned in the previous month to a total of $11. Now, our amount at hand is $121.
The following month, we receive interest on the $100 and then the $21 to a total of $133.1.
Compound interest starts off as pocket change but soon becomes the primary value of the saving.
Thanks to source for the image
Here’s the kicker – compounding doesn’t just apply to money.
My hypothesis is that everything worth developing or learning compounds. Fitness, self control, initiative – you name it and it likely works that way. Heck, even learning compounds.
Every trait that makes us better people is hard to develop at first. Start exercising today and it feels hard. The results either feel negligible or absent. But, climb up that curve and suddenly things feel different. There’s a momentum where there never was one. There’s an understanding of how pieces tie in together.
So, if you are aiming to get started on a habit that you think will make your life better – start today. Compounding is more powerful when you start earlier and do it for longer. And, for those of you who feel stuck after putting in effort for a while, push through. Keep at it. It is tough at first.
But, it’ll get easier. And, most importantly, it’ll be worth it.
7 thoughts on “Compounding”
So true. Even karma compounds!
Ha. I’d like to believe that for sure.
Now I wish there was experimental data to prove that. :)
Inspirational! As they say, if you want to succeed in life, run the marathon.
http://www.ALearningaDay.com – *Never failure, only learning and never older, only better..*
This is called the Matthew effect, which talks about accumulation advantage. the more you accumulate, the easier it is for you to accumulate more. Applies to money as well as knowledge :) Thanks for sharing !!
Thanks Aditya! :)
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