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You Need To Read The Compound Effect

The author Darren Hardy interviews six entrepreneurs a month for his magazine ‘Success’ and finds that every single entrepreneur uses the compound effect in some way. He said that “even though the results are massive, the steps, in the moment, don’t feel significant. The changes are so subtle, they’re almost inpreceptible.“

November 06, 2023

QUOTE OF THE DAY

“Humans are basically habit machines… I think learning how to break habits is actually a very important meta skill and can serve you in life almost better than anything else.”

Naval Ravikant

THE COMPOUND EFFECT

420 Words | 1 Min 32 Sec Read

If you were offered the following, which one would you choose?

Option 1: $10 a week with 10% weekly compound growth

Option 2: $5,000 a month with no compound growth

You’d probably gravitate towards option 2 because that initially seems like a much superior offer, but let's see how it actually plays out.

  • Month 1 - Option 1: $51 Option 2: $5,000

  • Month 2 - Option 1: $126 Option 2: $10,000

  • Month 3 - Option 1: $235 Option 2: $15,000

(You’re probably feeling pretty stupid at this point if you chose option 1.)

  • Month 12 - Option 1: $15,541 Option 2: $60,000

  • Month 16 - Option 1: $86,762 Option 2: $80,000

  • Month 18 - Option 1: $186,000 Option 2: $90,000

  • Month 24 (2 years in) - Option 1: $2,219,271; Option 2: $120,000

Now you may be thinking that those numbers are made up, but you would be wrong. Those numbers are the power of compound interest, and that's what the book ‘The Compound Effect’ teaches.

The author Darren Hardy interviews six entrepreneurs a month for his magazine ‘Success’ and finds that every single entrepreneur uses the compound effect in some way.

He said that “even though the results are massive, the steps, in the moment, don’t feel significant. The changes are so subtle, they’re almost inpreceptible.“

The decisions that you make every day are minor, irrelevent, and offer no ‘I told you so’ effect, so whats the point of doing them?

Its hard not to think this way when we live in a culture that Darren calls ‘the microwave mentality’ with everything being so incredibly instant!

Darren says that in order to get out of this frame of mind, you need to be clear and in alignment with what your core values are.

Then, as long as your daily actions and choices are filtered through your core values to make sure you’re only doing things that you know align, the microwave mentality will start to dissipate.

To discover your core values, you can do the following:

Look at people that inspire you or that you look up to, and ask yourself, ‘What are the common attributes that I see in all these people?’ If you can start to pinpoint those attributes, then you will land on your core values.

It's now your duty to know if your actions align with your core values.

This is how you know that you’re making enough small decisions towards the person that you want to become and ultimately taking advantage of the compound effect.

TAKEAWAYS:

Your takeaway is that monumental changes aren’t created through monumental decisions but by making small, insignificant actions every single day.

Don’t try and chase the big actions; focus on the small ones that you can do every single day.

BOOK OF THE WEEK ⤵️

The book of the week is ‘The Compound Effect’ by Darren Hardy, the book that teaches you how tiny little actions repeated daily can have a 10-fold impact in your life. Read it HERE

CREATOR OF THE WEEK ⤵️

TWEET OF THE DAY ⤵️

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