What I'm reading #39: How to apply compound interest to your everyday life


By Sam Instone - September 29, 2022

I received a message the other day that asked, “What’s the quickest way to become successful?”

As humans, we naturally search for ‘hacks’ or a ‘cheat sheet’ and gravitate towards the easy option in the pursuit of achieving a goal. 

But the reality is people achieve what they do ultimately because of consistency over time. My success hasn’t been the result of one great act. 

It's the result of many small, intentional and often mundane acts, repeated over a long period.  

More notably, evidence of the so-called 8th wonder of the world: compound interest. 

I’m sure you’ve heard about the power of compounding interest before…

It’s described as interest accruing interest and is a term widely used in investing. 

Although I've achieved success in this area, it’s proven even more effective in other areas of my life: career, relationships, and physical and mental health.  

It’s one of the most common denominators in the story of every ‘successful’ person out there. 

Compounding is a powerful tool. 

I believe it to be an imperative mental model to comprehend and has the power to shift trajectories in every aspect of your life, if you learn to apply it. 

You might be thinking “If it’s so profound, why doesn’t everyone apply it?”

Well… it’s technically invisible. 

At the beginning anyway. 

People want to do very little for the highest return possible, as quickly as possible. 

The reason people don’t do the small things that eventually accumulate to success is that they can’t initially see them.

We don’t value the small decisions or actions we make because they don’t benefit us in the moment. 

But actioning a series of small, seemingly insignificant changes that you can maintain can make a huge difference when you factor in time. 

“Habits are the compound interest of self-improvement. A small habit – when repeated consistently – grows into something significant” – James Clear

Cycling is a habit of mine.

I cycle to and from work every day, despite weather conditions or how tired I am.

Even though it’s just a short, easy ride each day, over time the effect of compounding adds up.

Year-to-date, I’ve cycled over 11,000km…that’s the distance from the UAE to Canada!

As a result of my small consistent choices, I’m now able to complete longer and more challenging rides.

Setting a goal is only the beginning and can seem intimidating. 

You can start the process by making choices that are 1% better than they were yesterday. 

You will begin to create invisible momentum. 

If you can get 1% better each day for one year, you’ll end up 37x better by the time you’ve done it. 

But consistency is the only key to unlocking the invisible. 

With patience and persistence, you can undoubtedly watch compounding change your life.

Think about your intention – what will you do differently from now? 

Further reading

Answer 2 super simple questions to reveal if you could own a horrible financial product, and not even know it

I invest my own money and most of our clients' money this way: How multifactor investing can help YOU meet your investment goals

What I'm reading #38: Leaving a millionaire legacy

Save and invest for a better life, book a call - SAM