The 8th wonder of the world

Albert Einstein is thought to have said:

"Compound interest is the 8th wonder of the world"

This is one of those things I wish I had known when I was 20, which is probably about the age from which I could have done something with it. Everything in life is build upon everything that was there before. In other words, life is a series of events that just accumulates over time and works like a compounding machine. For the more artistic, you can also see it like a painting, where each layer of paint is added on top of previous layers to build the final product that is our life. Or my favourite metaphor is Warren Buffett's:

"Life is like a snowball. The important thing is finding wet snow and a really long hill."

This seems like a simple concept, but it's a powerful concept. Think about it. If we try to understand it by quantifying, we can look at the compound interest algorithm. Let's say we grow in skill or knowledge 1% each week. Then over 1 year, we grow about 68%, which seems logical and somewhat unimpressive. Now let's stretch this over time to really understand the power of the snowball. Over 10 years, we grow 177 times! ...over 50 years, which may be seen as our working or productive life, we grow 172 billion times!!!! Life is not linear. Now we understand what they mean when they say we don't know our potential.

We intuitively know what we do today has an impact on the future, but we often just shrug it off thinking it won't have a real big impact and we can get our act together sometime in the future. But the younger we are, the worse the consequence of slacking off because when we're younger we have the most energy (trust me), most opportunities given we have least to lose, are more flexible to try new things, and are laying the foundations for what's to come. Let's imagine a snowball rolling down hill; if at the top of the hill it clips a rock, it will get deformed and by the time it reaches the bottom of the hill it's unlikely to look like a snowball, if it reaches there in one piece at all! Let's for a moment ignore the importance of lost time earlier in life, and look to put this in numbers so we can get a better feeling. Let's say in the above example, Björn practises the 1% weekly skills/knowledge growth philosophy religiously from the age of 21 until 70. Bobby on the other hand decided he'll have time to get his act together later and parties until he's 36. Bobby's path exemplifies a common story for many. Both started at the same level at age 21. The difference between Björn and Bobby at age 70 is.... 2347 times!! So 15 years cost Bobby 2347 times the skills and knowledge Björn accumulated during their productive lifetime. This is like comparing the surface area of Fiji, to that of the entire continent of Africa. Björn is operating in another universe compared to Bobby. This isn't mathematical trickery, it's how the snowball works.

What this means in day to day life, to me anyway, is to focus on one step at a time. Execute it. Then focus on the next step, and so forth. Before you know it, you can't even recognise yourself.

Now you know why I wish I learned this at the age of 20, instead of in my mid 30's. I'm Bobby. Luckily for me, I plan to be productive into my 90's.