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You Need to Read 'The Compound Effect'
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.
Callum Carver
March 04, 2024
QUOTE OF THE DAY
“More is lost by indecision than wrong decision”
YOU NEED TO READ ‘THE COMPOUND EFFECT’
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.
LESSON OF THE DAY ⤵️
“How does one redirect focus from something that relentlessly grabs one's attention such as women, junk or unhealthy habits?”
You need to give yourself an alternative.
People tend to try and break bad habits by eliminating the habit completely and hoping by sheer will that they won’t fall back into it, but the problem is that when you try and remove something entirely, you will find that you develop more of a craving for that thing than ever before.
Therefore, you need to replace the distraction or the bad habit with something much more beneficial.
A smoker, for example, will struggle to go cold turkey, but if they can find an alternative that does far less damage, such as chewing gum, then they will find it much easier.
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