Warren Buffet once told us to imagine a snowball rolling down a hill.
As the snowball rolls, it picks up more snow. This will cause it to grow larger, which means each roll will pick up even more snow. Before you know it, you have a massive snowball growing at a ridiculous rate.
This is the basis of compound interest.
It doesn't take richest-man-in-the-world type knowledge to understand the power of compound interest and how it can be applied to more than just finance.
How to achieve literally anything.
We are often pushed to dream big.
"If you can have anything in the world, what would it be?" They say. "If your dreams don't scare you, they aren't big enough."
Much of the time these dreams are 'hail Mary's'. We know we won't even get close to them. Pipe dreams.
But then how do you explain those people who DO achieve massive, outrageous things? Luck? Family? Charisma?
Or are they simply harnessing the power of compound interest?
James Clear refers to it as the 1% rule.
The aggregation of marginal gains over time is the difference between you and the person you idolise. Success is built on small, compounding improvements.
Each day, go to sleep better than you woke up.
Any outrageous achievement started somewhere. Steve Jobs started Apple in his garage. Google, Amazon and Harley Davidson also started from similar small, dingy garages. They turned out pretty well.
The key is to dream big, but focus on the small day-to-day tasks. Each day, each month and each year, grow your snowball. Allow it to pick up traction and start doing the work for you.
In the words of CEO Gary Vaynerchuk, you have the clouds and the dirt.
The clouds is the birds eye perspective of your life path. Where are you going? Looking at life in it's whole entirety. This is important but spending too much time here leads you to never getting anything done.
That's where the dirt comes in. The nitty-gritty of the day-to-day. Getting your mitts grubby, breaking a sweat and chipping away relentlessly, one task at a time.
Another Gary V quote which is relevant (and also my phone background.
Have patience in the long-term. Trust you'll get there with time.
But, right now, do the work, so your patience pays off.
Here's how Buffet and his snowball makes your life easier.
As you begin to work towards a goal you are crap at it. Harsh, but true. The hardest part is always starting. You have no momentum and the inertia to stay within your realm of comfort holds you tight.
You must get the snowball rolling.
As you grow your competence, the snowball begins to pick up snow and get a little larger. The earlier obstacles which were troubling you aren't so difficult and since you're on a roll it get's easier to pick up new, more advanced, skills.
Given enough time, growth becomes automatic as it's harder to stop than to keep moving.
This is the essence of investment and how hiring a coach can tenfold your results (and ability to hold on to your results once you achieve them).
With just two factors, a coach can grow your snowball to staggering proportions.
A coach gives you:
1. A direction for the snowball to roll.
You can achieve anything but you must know what you want. Where are you going? How will you know when you get there? Set a goal.
2. The motivation, accountability and discipline to push through the difficult beginning.
As said above, starting is the hard part. Your snowball is tiny and it will look like it's not even growing. Nothing is happening. You have to keep at it. Work hard.
Put in enough time with a coach to allow compound interest to take hold. The momentum will take you a long, long way.
In a personal sense, you can use compound interest to build any aspect of your life.
- Your network. One friend introduces you to their friends, their friends introduce you to their friends, their friends intro... you get it.
(Here's how to build your network WITHOUT tactics and manipulation.)
- Your physique. Small wins are the secret to an incredible physique.
- Your impact. You are the product of your habits and behaviours. Improving these by actively working on your mindset, reading, learning and developing discipline will put you in a position to inspire others.
Progress based on compound interest is the ultimate way to invest your time, money and energy.
Who can argue with getting more in return than what you put in?
Other than some long term monetary investments (like your super), you can utilise the power of compound interest by hiring a coach. You will break the inertia of starting and begin rolling in the right direction.
And then the snowball begins to grow.
If you're stuck trying to push your snowball uphill contact me here for coaching. In-person or online (for those not in Sydney's North Shore), you'll receive all you need to achieve anything.