I’m sure we’ve heard the word compounding first during our elementary days in science class that reiterate compounding as a substance consisting of atoms or ions of two or more different elements in definite proportions joined by chemical bonds into a molecule. Compounding as a concept has been present in other areas too; be it in linguistics, pharmacy, and law.
However, this article will not entail on these areas but primarily on how I found the pragmatic compounding has been effective in my life and applicable in yours too.
1. The 1% better every day will be 37.78 better in one year.
With plenty of literal meanings of compounding- mix, combine, mingle & coalesce, I applied the positive compounding in my habits. In the book Atomic Habits by James Clear, he mentioned that an atomic habit is a little habit that is part of a larger system. Just as atoms are the building blocks of molecules, atomic habits are the building blocks of remarkable results. Compounding my efforts to read books every single day and be consistent in writing paid when I became a published author after two years.
2. The Rule of 72
As young adults, our earning power is less compared to the professionals in their 30s or 40s but we have our greatest asset, which is time. With current inflation raging up to 8% and as mentioned in our last blog of things to do in the 20s that don’t rack up debt, being responsible for our finances shall be prioritized. I suggest investing early with due diligence on investments like stocks, real estate, and mutual funds. These investments have been safe relatively over time. So how the rule of 72 can be applicable?
The Rule of 72 is a heuristic used to estimate how long investment or savings will double in value if there is compound interest (or compounding returns). The rule states that the number of years it will take to double is 72 divided by the interest rate. So, if the interest rate is 5% with compounding, it would take around 14 years and five months to double.
3. “The swiftest way to triple your success is to double your investment in personal development.”- Robin Sharma
Last but not the least, one power of positive compounding is investing in personal development. It is a lifelong process of inward and focusing on ways to better yourself. You can make your goals and desires a reality by focusing on your own individual personal development plan.
Your potential is limitless, and investing in personal development is a way to harness your many talents.
Article written by Ghayle Quinzon – Sales Account Executive, 4Sight Technology