Here’s why it’s so important to make the power of compounding work for you.
For this example, let’s start with a nominal amount of 100. For the purpose of this exercise, 100 could represent anything – money, social media followers, a zombie outbreak etc.
Now, let’s say this number grows by 20% each year.
Here is the series plotted as a bar graph.
You’ll note that our starting value of 100 hasn’t grown a lot in the first few years, but it really takes off into the 1,000s in the later years.
We can also observe this by plotting the gains each year, rather than the total amount:
What I want to draw your attention to is the difference between the first year and the last year.
The gain in the first year is 20, but the gain in the last year is 639.
Here’s where this message hits home.
If you delay by a year starting an initiative that has a compounding growth rate, you may think you’re just missing out on the gains from that first year (in this example, being 20).
But what you’re actually missing out on is the gains from the final year (in this example, being 639).
This is why it is so so so important to start now rather than later.
You’re not going to see lots of gains at the start of your journey, but soon enough the payoffs will grow by significant amounts.
Don’t sacrifice your later years of maximum payoffs by delaying action today.
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