Compound Growth in Everything?
interest accumulated from a principal sum and previously accumulated interest. The formula for compound interest is as follows:
Compound interest is really hard to grasp as a human because we experience time linearly and so it's hard to think of something like exponential growth when it comes to money and how it compounds when reinvested. Another reason why this is hard to implement is that it takes consistency and patience to see the results of compound interest.
The interesting thing about this principle is that it applies not only to finance but also to expertise, knowledge, and habits. James Clear talks about this in his book Atomic Habits sharing that self-improvement can compound similarly to that of finance. Specifically, he shares that if you can get 1% better each day, over time you can see a 37% improvement.
I personally find it a hopeful message that plateaus can be surpassed when my attention focuses on small improvements over time usually through deliberate practice. The problem I have with the above image is that I don't really know what better means. It has been a while since I have read the book and I assume that Clear explains it but for now I find specific examples in my own life insightful.
