A bullet can stop a terrorist. Or kill a weeping child clinging to their slaughtered parent’s body.
Bullets are neutral. So is technology. And the internet. They serve the good and the bad.
Compound interest is another potent force that can either work miracles or wreak havoc in your life.
Whenever I think of it, I think of a song called “Racks.” Search “YC Racks.” Take a second to listen to it.
Compound interest is interest on interest on interest.
In the “Racks” video there’s cash everywhere. Compound interest allows you to generate money. Invest early. Leave it alone. Let the money accumulate.
Or so the story goes.
Such strategies typically come under clickbait titles like “How to Retire A Millionaire” or “How to Turn £10,000 into Millions.” They’re flawed.
Money isn’t the only thing that can compound though. Things that compound:
Lies. One innocuous lie births several more. To maintain one, you must tell more. Soon, there are too many strings. So many that every time you open your mouth you either risk being exposed or have to tell another.
Bad decisions. That one time you followed the money rather than your instincts. That day you decided to quit rather than persist. Bad decisions pay you back with guilt, shame and regret.
Bad relationships. The negativity that seeps out of a bad relationship poisons every other aspect of your life. The longer you allow them to fester, the deeper the pain they cause.
Good decisions. Taking that chance. Making the call. These are decisions that change your life for the better. The invaluable experience you gained from them will be with you until you reside in the dirt.
Good relationships. They amplify the richness and wealth in everything you touch. A person surrounded by people he loves and cares for, and who reciprocate that feeling, can conquer many things.
Knowledge. The more you know about a subject, the easier it is to learn even more about it. The more connections you can make between your ideas, the more patterns and connections you’ll see in the world around you.
Problems. If you don’t solve them, they grow. Either handle them early or risk facing them when they swell to monstrous proportions.
When it comes to working with compound interest, there are two things to keep in mind. If it is a positive form; keep your hands off. Every moment passed is a moment that that asset grows stronger. If it is a negative form; identify it early and remedy it as soon as possible.
When we are dishonest, or continue bad relationships, or let the effects of poor decisions run rampant, or ignore persistent problems, we are handicapping ourselves. The longer we delay confronting these issues, the harder it becomes to undo the damage they have wrought.
Compounding is a neutral force.
You can allow it to work for you. Or continue to let it work against you.