Based in Vancouver, Canada, this is a blog by Michael Argast. My areas of interest include travel, economics, technology, the environment, personal development and other eclectic topics.

Compound Interest... (personal development)

The greatest force in the universe is compound interest - a quote often attributed to Einstein but most likely made up. As Aristotle said - "Don't believe everything you read on the Internet".

Regardless, compound interest is an incredibly powerful force. I like to think of energy, efforts in life as 'investments'. Some will pay off, some won't. If you want it to pay off, like a seed you need to find it fertile soil, good growing conditions and water it regularly.

One rule of compounding is that a small change in the percentage return makes a huge difference over the long run. It is why we're happy with a 2% GDP growth rate instead of a 'measly' 1%, or describe growth rates of 5-6% as 'explosive'. If you run those growth rates over 5-10 years, the difference in scale makes a massive difference to the end result.

This is why startups are driven by "grow faster", why China has dramatically increased it's earning power and middle class. If you follow trend lines that have 10-20% growth rates, it leads to Apple-like growth in the smartphone market creating the world's most wealthy company, it leads to solar power being cheaper than most conventional power over the next decade, and it leads to electric vehicles replacing conventional ICE vehicles inside of 20 years.

One of the most important investments you can make is in yourself - you can lose your job, you can lose your house, you can lose your money, but investments in yourself - in your skills and abilities are much harder to take away from you (absent head injuries - wear your helmets!).

The person who invests a portion of their time in self-improvement and pushing their performance to the next level consistently over time will end up being dramatically more valuable to the market, their employer, their own earning potential, than someone who invests a lot slower or not at all in their earning capability.

As someone who has managed hundreds of staff, the ones who were always the most interesting were those willing to make that investment, and they usually saw great career success as a result.

Perhaps the interview question should be - "What have you learned lately, or what are you learning now?".



Science (fact)