Understanding How You Can Reach Your Goals Through Compounding

Originally published on Cleopatra's Worldwide — February 27, 2019

Quick success is something we see a lot. In the media, on Instagram and on TV, the age of successful people can seem very young. There's a tendency to celebrate this — look how much they've achieved already!

Whilst it's never as rapid as it looks from the outside, some people undoubtedly do climb quickly. But if you aren't built like this, there is another way to success and though it takes longer, there are tonnes of benefits. This slower approach also comes with a much higher success rate.

A gambler can bet all in, and there's a chance he'll win big. But there's also a bigger chance he'll win nothing. The smart investor instead makes smaller, regular considered investments over a period of time. The bets you make in life work much the same.

Starting with money, Simple Interest is interest applied to the original amount. So, if I make an investment of $10,000 in a bank offering a simple annual interest rate of 5%, over four years: $10,000 x .05 x 4 = $2,000. Original deposit + simple interest = $12,000.

However, with compound interest of 5%, I get interest on top of the growth resulting from the interest — arriving at $12,155.06 after four years. Compounding is like growth on top of growth.

"If you fold a cloth napkin upon itself once, how thick is it? On the third fold it equals 1/4 of an inch. Here's my question: How many times would you need to fold this napkin before its thickness would touch the moon? …Amazingly, you'd reach the moon on the thirty-ninth fold." – Tony Robbins, Awaken The Giant Within

"In essence, you make your choices, and then your choices make you." – Darren Hardy

The basic rule of compounding in success is this: great rewards can come from making smart small choices every day over a long period of time.

Or put another way: consistency pays off, just not straight away.

FACT: Coca Cola only sold 25 bottles in its first year.

In the world today, with a culture of instant sharing, the majority of people are impatient. They're desperate to show off their success before it's really been earned. I propose taking a slower, more enjoyable route forwards and learning about yourself along the way.

"Sometimes the longest way around is the shortest way home." – Ryan Holiday