The idea of the compounding effect is initially coming out of the financial and investment field and is always related to the compounding interest. Compounding effects is a scenario when the item increases with its rates repeatedly through a long period.
The compounding effect is powerful — the longer the time you invest, the more returns you will get. Fortunately, you could implement this rule in your daily life and see its power.
Miles Beckler proves compounding effect
Miles Beckler, who started his first website, Ask Angels, with his wife in 2009. His story proves that the compounding effect works, and he further supported his story with other successful cases as well.
Just like every other first start-up, Miles faced problems during his journey to start an online business. He meet a lot of fake “gurus” who caused him to spend extra unnecessary money; the “shiny objects” always distracted him and stopped to continue focusing on one project — this was an awful infinite loop for him.
The power of compounding
Fortunately, he found his problem and understand the concept of the compounding effect. He stayed away from those distractions, building small baby steps every day consistently by creating content on his website, and finally became one person who earn a million from his website.
Miles was generous to share his experiences and ideas on both his website and his YouTube channel. One of the most important videos is the video that he explained the concept of the compounding effect.
Here is the question that he asked in his video:
Which one will you choose?
A. One million dollars
B. A penny that doubles by itself each day for 30 days
In his video, you could see that in the first week, the penny does not make many changes compared to the one million dollars. Even on day 15 and even day 21, the amount of penny is so small that you can’t even realize that it is doubling. But, at the end of day 30, the penny becomes 5 times more than the one million dollars.
Miles proves that when you just start anything, everything seems useless for you, and you may not see the effects. However, after watching Miles’s video, you now have a mindset that every baby step that you are doing right now is building as a compounding element in your life.
What you need to do is to take action, say “no” to other distractions, focusing on your goal and start building your compounding elements to see the powerful aftereffects.
New York Times bestsellers explained compounding effects
James Clear, one of the New York Times bestsellers, also uses the concept of compounding effect in his book Atomic Habits. In his book, he explains how habits work in a compounding manner, and why building small habits brings remarkable results.
“Habits are the compound interest of self-improvement. Getting 1 percent better every day counts for a lot in the long run.” — James Clear.
According to James Clear, you could see that every small thing that you do will compound and bring powerful impact once it reaches a specific time. Your actions will stack on one another slowly but consistently and become a firm foundation for your next actions.
“An atomic habit is a little habit that is part of a larger system. Just as atoms are the building blocks of molecules, atomic habits are the building blocks of remarkable results.” — James Clear,
James Clear believes that building small habits will stack up like computing interest and bring remarkable results for you, thus he wrote an entire book that explains the power of building small habits.
Every action seems impossible to be powerful in your life. But, once they build up like compounding interest, you could see how they affect your life.
Build compounding effects wisely
Even though the compounding effect is powerful, you should know how to build your compounding components and how to use them wisely to bring positive benefits for you.
Every outcome comes from action, so you need to take action to build your compounding component. If you only hold back your perfectionism or your procrastination, you can’t see this compounding effect. You need to start your first step by taking baby steps actions to meet this compounding effect.
After taking your action, make this action as consistent as possible. Compounding effects will only show out when you make your actions consistently. They did not build Rome in a day. The key element that built Rome was the consistency of actions that were taken by the people together.
Invest in time
When you build a consistent action, you now need to have a mindset that it may take you a long time to see its benefits. Invest in your time, pay for your patient, and take your baby steps slowly.
Both Miles and James Clear told you compounding effect needs time to generate, but afterward, it would bring remarkable results for you. You need to stay focus on your goal and don’t give up your current actions easily.
“Success isn’t always about greatness. It’s about consistency. Consistent hard work leads to success. Greatness will come.” — Dwayne Johnson
If you want to meet the compounding effects and see those significant effects, you need to fulfill these three criteria: Take action, consistency, and pay your time. The power of compounding your actions is like investing, while investing is like growing a plant day by day.
The day you take actions, the day you build your actions, your actions will stack and compound into remarkable impact at the end of your journey. The only thing that you need to do is to take baby steps right now and make them consistent as long as possible.
“We all have to start somewhere, and doing something is better than nothing at all. Start small so you don’t get discouraged and give up. Remember, it is all about consistency.” — Khloe Kardashian