Happy LEAP Year Everybody!
Albert Einstein had it right when he said,
It’s true, Compound Interest is the 8th wonder of the financial world.
Do the math, it’s seemingly miraculous!
Look at the chart below.
If you took $1,000, and instead of squandering it on fancy golf clubs (causing you will shank just as regularly) or a pair ofJimmy Choo pumps (causing your feet to curse his name, and you), you waved the compound interest wand over it.
In 20 years that $1,000 miraculously becomes $7,000+. It’s a miracle!
That same miracle math works in your life choices, which is why I call Compound Choices the 8th wonder of the success world.
If you’ve read my book, then you know that The Compound Effect is the principle of reaping huge rewards from a series of small, smart choices. What’s most interesting about this process to me is that, even though the results are massive, the steps, in the moment, don’t feel significant.
Whether you’re using this strategy for improving your health, relationships, finances, or anything else for that matter, the changes are so subtle, they’re almost imperceptible. These small changes offer little or no immediate result, no big win, no obvious I-told-you-so payoff.
So why bother?
Most people get tripped up by the simplicity of the Compound Effect.
For instance, they quit after the eighth day of running because they’re still overweight. Or, they stop practicing the piano after six months because they haven’t mastered anything other than “Chopsticks.” Or, they stop making contributions to their IRA after a few years because they could use the cash—and it doesn’t seem to be adding up to much anyway.
What they don’t realize is that these small, seemingly insignificant steps completed consistently over time will create a radical difference.
Let’s go back to Einstein and show you how compound interest works in a mortgage.
Take a look at the chart below.
You’ll notice for a significant amount of time you are mostly paying interest and realizing very little principle gain.
In fact, notice that in a 30-year mortgage you are not even realizing HALF principle gain for each FULL payment until about year 22.
But take a look at year 29 and 30. Nearly all of your principle payment gain comes in those final two years.
That is exactly how it works with your choices.
For a L…O…N…G while it seems you are not realizing any gain (or consequences) from your choices.
But you have initiated the miracle process. The compound effect has been ignited, even if you are not seeing, feeling or realizing the progress. Sustain those small, seemingly insignificant choices made consistently over time and you will reap miraculous rewards.
Action for Today:
Let’s put the Compound Effect to work for you today!
Take these Actions Steps:
- Write down one of your big goals.
- Now write out the half-dozen small, seemingly inconsequential actions you can take every day that will lead you to that goal.
- Additionally write down the small, seemingly inconsequential actions that can lead you away from that goal.
- Do the small positive steps. Don’t do the small negative steps.