The Eighth Wonder

The Eighth Wonder

One of the biggest ideas in life is compounding. 

Einstein called compounding the eighth wonder of the world. 

Here’s a simple idea for your life: If something compounds at 1% a day, it will be 37 times better in a year. If something loses 1% a day, it will be 0.03% of what it was in a year. 

If you want to get better at investing, try to get 1% better every day. Then, in a year, you will be 37 times better. If you want to get better at being more outgoing, try to be 1% more outgoing each day. 

I know it’s hard to quantify. It’s impossible. But the direction is what is important. 

 

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Compounding isn’t just about investing though, it’s about your life, it’s about relationships, it’s about your career.

You can use the power of compounding in every area of your life.

The three most important areas to apply compounding to:

  1. Learning
  2. Relationships
  3. Investing

 

Learning: 

Try to go to bed 1% smarter every day, if you do that for a few years, you’ll quickly be one of the smartest in your industry.

Three simple things to shoot for every day.

  1. Try to speak to one person smarter than you
  2. Read 25 pages of a book – preferably one more than 10 years old
  3. Read one newspaper everyday – yes, they are still useful 

 

Relationships:

Relationships can change your life exponentially. Friends are there to support, educate and open doors for you.

Three simple things to shoot for every day.

  1. Reach out to a friend you haven’t spoken to in a few months – and schedule a time to speak on the phone
  2. Try to talk to one new person every day – even if it’s 5 words.
  3. Introduce two people you know, who’d like meeting each other

 

Investing:

When it comes to investing, you can’t start with the power of compounding early enough. 

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)
Four simple things to start:

  1. Open a savings or investing account
  2. Start putting 10-15% salary aside as savings, no matter what you make
  3. Go through your monthly spending and find $100 to cut out
  4. Read four books about investing every year

 

Compounding is a very powerful idea, don’t limit it. Find as many areas of your life to apply it to, and let it show you why Einstein called it the Eight Wonder.

I’d love to hear about how you are applying the power of compounding to your life.

 

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