Compound Self Interest
Published in Blog Archive.
The longest journey begins with a single step. How do you eat an elephant? One bite at a time. And, of course, there’s the fable of the tortoise and the hare where slow and steady wins the race. The shared idea here is that small positive action driven by consistency yields success. Tony Robbins used to preach about how the difference of a few millimeters in someone’s approach (to life, to golf, to whatever task is at hand) can make the difference between success and failure. But the opposite holds true as well: Each millimeter in the wrong direction, promoting distance between reality and ideal, is going to be compounded by the next. The result? Before long those small — and on-their-own nearly insignificant — errors begin to carry some serious weight.
If we’re talking finance, small capital investments can add up over time, with compound interest coming into play to yield significant returns. The theory is the same here, though because there isn’t some immediate financial pay-off, it’s sometimes more difficult to see how small positive decisions are to “pay off” over time. James Clear (via 99u) focuses on compounding small improvements in the concept of “The Aggregation of Marginal Gains,” relating how even the smallest of personal changes can add up over time,
Most people love to talk about success (and life in general) as an event. We talk about losing 50 pounds or building a successful business or winning the Tour de France as if they are events. But the truth is that most of the significant things in life aren’t stand-alone events, but rather the sum of all the moments when we chose to do things 1 percent better or 1 percent worse.
The idea is simple: In remaining mindful of how compound interest in our health, our self, and our future works, we’ll see the tiny results of our decisions and actions add up over time. These one percent changes will take a myriad of forms for different people, but in a week, a month, a year from now – they will begin to amount to something huge. It’s really just up to us as to whether or not that “something huge” will be a huge success or a huge regret.