2024/4/30
The great scientist Einstein once said: The most powerful weapon in the world is not the atomic bomb, but time + compound interest.
As a person who was not born with a silver spoon in his mouth, utilizing the compound interest effect may be a chance to turn things around.
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01
What is compound interest thinking?
The essence of the so-called compound interest thinking is: doing thing A will lead to result B; and result B will in turn strengthen A, and the cycle will continue.
Just like rolling a snowball, the snowball picks up more and more snow, becoming bigger and bigger, and the bigger snowball can pick up more and more snow, and this will continue to happen until the snowball becomes unimaginably big.
Just like the accumulation of wealth, when you have surplus funds, even if it is not much, as long as it can generate surplus, even if it is a very low surplus (for example, a 5% rate of return), repeat it continuously, and the interest will compound, over time, it will also be a large sum of money.
Economists use a formula to express the compound interest effect: (1+r)n
R represents what you are doing, and N represents time. When r is positive, for example, if you insist on reading for half an hour every day, the difference between you and others may not be apparent in one or two days, but after thirty or forty years, the difference will be beyond your imagination.
For example, if you run for half an hour every day, your body may not become stronger in one or two days, but after 30 or 40 years, some people of your age will be weak, but you can still eat three bowls of rice at a meal and climb to the sixth floor without breathing. As long as r is positive, that is, you are doing the right thing, time will bring you miracles.
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02
How to improve compound interest thinking
For many things, the compound interest effect will only emerge after persistence reaches a critical point, such as the food anchor Liziqi: persistence is one of the reasons for her success.
As the first strategy in life, compound interest thinking requires you to have the following qualities: patience and persistence. As long as the direction is right, don't be anxious or uneasy. Please give yourself more time.
Don't overdraw
Staying up late to work overtime to earn money, sacrificing health to gain wealth, no matter what the reason is, it is not advisable.
Time is money, time is life, and overdrawing time is equivalent to overdrawing life. Another requirement of compound interest thinking as a life strategy is: do not overdraw health, wealth and time.
Sense of Purpose
Life goals determine whether you can continue to move in the same direction. Hard work without a goal is often easy to give up halfway, and the effort becomes worthless. Therefore, the stronger the sense of purpose, the greater the impact of compound interest thinking on your life.
Believe in the power of time
Time is a great author. The accumulation of time and the compound interest effect will definitely bring you returns beyond your imagination.
Those who persist in reading, exercising, and investing in themselves for decades are more likely to succeed.
All the things they did were not great, but very ordinary. They were things that everyone could do, but because of their persistence, time made them great.
When you give, the rate of return is not the most important thing. What is most important is to think about how you can persist for a lifetime.
The same goes for investment and financial management. You don't have to try every investment because you don't have that much energy and time. The most important thing is that all investments are risky, especially for projects with higher short-term returns. Once you make a mistake, the loss will outweigh the gain.
Try to invest your time in investments with long-term returns, pay attention to the accumulation of time and the compound interest effect, these are truly valuable things.
