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Compound Interest

By: Michael Blankenship |

“The best time to plant a tree was 20 years ago. The second best time is now.”

– Chinese Proverb

According to a compound interest calculator I found online, if I invested $100 every month with a 10% interest rate, after 10 years I’d have around $20,000; 20 years and I’d have almost $70,000; 30 years and we’re at about $200,000.

That’s the power of compounding interest — the money you make from the investment becomes a part of the investment, creating exponential growth over time. 

Einstein once said, “Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.” 

And while there’s an obvious lesson here to be learned about finances, compounding interest also takes place in other parts of our lives. How did Steve Jobs build Apple? How did Jeff Bezos build Amazon? How did Nasa go to the moon? For that matter, how are skyscrapers built, books written, civilizations formed, habits created, or complex organizations maintained?

The answer is compound interest, and the story is always the same. 

Someone started working to achieve something. They did so consistently, with passion and grit. At first, progress was slow. But the work they did created systems and processes that stacked on top of eachother and, over time, things became just a little bit easier and more effective. And again, as more investments were made, it became easier and more effective until so much time had passed that the thing was basically building itself thanks to the time and/or money consistently invested by the go-getter. 

If there’s a secret to success (in every aspect of life), that’s it: small investments made over a long period of time compound and create achievement that’s disproportionate to the sum of the investments made.

*This is an excerpt from 101 Lessons on Growth, Success, & Practical Progress*

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