Success 301 — The Power of Compounding

In my earlier posts, I discussed the idea the secrets of success are available to all of us, and not just the fortunate few in life. I mentioned best-selling author Robert Kiyosaki and his Cash Flow book series, and the clues he shares in it. In this post, we’ll discuss clue #3, The Power of Compounding.

If you will recall, I started this series with a story about talking to someone about whether they wanted a penny a day doubled, or $1 million. They chose the $1 million, not understanding the concepts of The Power of Compounding.

So, what happens when you use The Power of Compounding and double a penny daily for 31 days? The following chart is eye-opening!

DAY AMOUNT
1 $0.01
2 $0.02
3 $0.04
4 $0.08
5 $0.16
6 $0.32
7 $0.64
8 $1.28
9 $2.56
10 $5.12
11 $10.24
12 $20.48
13 $49.96
14 $81.92
15 $163.84
16 $327.68
17 $655.35
18 $1,310.72
19 $2,621.44
20 $5,242.88
21 $10,485.76
22 $20,971.52
23 $41,983.04
24 $83,886.07
25 $167,772.16
26 $335,544.32
27 $671,088.64
28 $1,342,177.28
29 $2,684,354.56
30 $5,368,709.12
31 $10,737,418.24

Now that we see the amazing things The Power of Compounding can do, how can we put it to use for ourselves, in our lives? Author Jeff Olson wrote about it in his book The Slight Edge.

He said small activities compound themselves over time. These result in big changes in our lives. When considering the impact incremental changes make in our lives, think about how much your body would change in a year if all you did was eat 1 donut every day, in addition to what you are eating now, without adding or subtracting anything else, or any exercise. What would happen? You’d gain weight!

In the same way,  saving a little money every month for years, slowly accumulating it, letting interest compound and never touching the balance will result in a nice nest egg years later if you start young. That’s why noted scientist (and acknowledged genius) Albert Einstein called The Power of Compounding Interest the 8th wonder of the world!

As you can see by these examples, The Power of Compounding can be used in our favor, or for our harm. In my next post, I’ll put all of what we’ve discussed so far together, and see where we’ve come out.

LIFE Leadership Logo

Advertisements

One thought on “Success 301 — The Power of Compounding

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s