What's The Big Deal With Compound Interest? And How Do You Leverage It?

All the benefits (and detriments) you see are a result of Compound Interest.

Compound Interest is a term you first came across in Math class in school. Turns out it's more than a formula; it's the recipe for success. It has a role in your life - in relationships, in money, in learning etc.

Fortunately you can leverage your positive behaviors and eliminate your negatives by identifying the compounding in your life.

How Do I Leverage It?

Given compound interest relies on time and effort, there are a few things to consider:

1. Play Long Term Games

Long term games reap the most out of compound interest.

By playing long term games, you accept that the short term requires putting in the work i.e. building the foundations. As you move along, things get easier and you're able to take on complex tasks. Consistency is key.

2. Accept The Sunk Costs - Be Willing To Unlearn

If you've been learning things the wrong way, that too would compound over time.

If you're at a point in life where you're working, everything at this point including your degrees are a sunk cost. If you're looking to pick a new skill, you may have to unlearn a lot of things and start from the basics.

Learning on a foundation that is shaky just because you've 'already' put in the work is detrimental. This is the side of compounding we DON'T want to leverage.

3. Choose The Right Place To Invest

Everyone isn't good at everything. It's essential to pick things YOU are good at so it's sustainable to see the benefits of playing long term games. Explore, participate and pick what works for you.

Once you identify those games, you put in the work. When you put in the work point 1 comes into play.

Unlearn ➡ Learn ➡ Compound. This is the trifecta.