Compound interest is one of the most powerful forces in the universe. In finance, in your habits, and throughout life in general, this idea has transformative power like nothing else.

Think about a simple investment equation: if you take an initial sum of $40,000 and invest it at an average rate of 10% over the course of 40 years, you will become a millionaire. But here’s the kicker: when you look at the composition of your new 1 million dollars you will find something interesting. You would have $40,000 of your initial investment, $136,000 of simple interest on the principle, and a whopping $869,000 of compound interest.

The large majority of your money’s growth can be attributed to the miracle of compounding interest (i.e. the interest that was earned on your interest). In other words, when you invest in the right things, you will experience exponential growth; and so it is with life.

All of the biggest benefits in life come from compounding interest: relationships, habits, money, success, and growth are the result of making small investments in the right things and watching those investments grow over time.

For example, when you invest in relationships through a genuine care for someone else, that relationship will benefit you in more ways than one. The interconnected web of good deeds will conspire to multiply your investment exponentially . There is a compounding effect in the nature of making small investments in the right things that brings exponential growth over the course of time. The theory of compounding interest is based on the reality that your investments will grow on top of your investments.

Those who are in pursuit of excellence understand the theory of compound interest. They understand the gravity of the decisions they make. The idea that everything is everything presupposes the understanding that the decisions you make (good or bad) have a compounding effect not only on your life but on the lives of everyone around you.

No decision is made in a vacuum, because the result of that decision will have a ripple effect that travels far into the future.

The question then becomes, as a leader, what kind of investments are you making on a daily basis?

Are you making deposits that will compound the values, principles, and outcomes that align with your core purpose?

Are you harnessing the power of compounding interest for good or for evil?

What are you investing in today?

Do you know 1 person you could send this to today?

The Magic of Compound Interest

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