Math wise, we know its power. Put in X amount annually for Y years at I interest rate and get Z result and when we compare the Z result with the principal, the discrepancy is pretty astonishing. It blew Einstein’s mind to the point that he called it the most powerful force in the universe and the 8th wonder of the world.
It works great if we stick to it when it’s working for us. It sucks when we’re in debt and it’s working against us.
But the power of compound interest, while it’s clearly visible in mathematical terms, isn’t so visible to many others in different areas of their lives.
Nobody wants to figuratively put in their X amount annually for Y years to get the Z result they want in various aspects of their life.
They want the Z result right now. In one fell swoop.
But again, we can’t get there unless we put in the X amount for Y years.
The “interest rate” – nature provides it.
And it’s a good one.
We can’t get instant health the day before our arteries clog.
We need to put in the time to exercise, eat right, sleep, etc. everyday, for years on end.
We can’t have our best friend the day after we first meet him/her. We need to put in the time to listen, help, be there for them to get to that point where they become our best friend.
If you think about it, everything we truly desire in life comes from the concept of compound interest.
Now what we CAN control is the X and the Y. How much we put in and how long we do it.
The interest rate we can’t control so much but we know it’s there. We can FEEL it working, especially in the beginning stages. We feel the exponential growth. And then it tends to level off a little, come back down, stabilize, and settle in at a constant rate for the long haul. It seems during this time that people tend to get OFF the plan.
They stop putting in X amount every year and while mathematically speaking, your account still increases, in non financial aspects of your life, your account balance can actually decrease.
You can do all the healthy things for 10 years but if you stop doing them, your “health account balance” will start to drop.
This is how compound interest works in life. You see an immediate spike in the beginning, and then it levels off. The “high” of the spike wears off and the returns don’t seem as great as they were in the beginning so people tend to get off on in the middle of it, not knowing that they big payoff is near the end.
If they keep on “depositing”, you’ll see that the account balances grow leaps and bounds in the later years, every year.
We must be wary not to fall off our path in the middle when things don’t seem to be as growing as fast as they were in the beginning.
And we also shouldn’t fall for the trap of falling in love with the Z result to the point we don’t do our part in the X and Y department..
Let us stop focusing on the Z result that’s so appealing so much.
Let us focus on the X and the compounding instead because if you think about it, it’s a whole lot easier. It’s more believable. It’s present minded. It’s focused.
And when we engage in that process, we find before we know it, that the Z result becomes a natural byproduct.
There’s another word for all this that’s doesn’t sound as intriguing and wondrous as compound interest.
We like to call it habit.
