I. Example Beats Precept
Earlier while on FaceTime with my teenage cousin, he pointed into the screen.
"What does this quote mean?" he asked me, referring to the Einstein sticker covering my Mac's case.
I flashed a smile. "The quote means what it says, young fella... 'Compound interest is the most powerful force in the world.' ”
His blank expression suggested I needed to fill in the blank.
Because example beats precept, I had just the illustration in mind.
"Your favorite food is pizza, right?" I asked.
He nodded.
"Cool. Let's say you hopped on a plane and moved here with me in New York, where pizza is king, and for an entire year – each day you bought a $2 slice of pizza from Little Italy," I said. "By the year's end, you'll end up spending how much?
He held up a finger. Seconds after calculating on his phone, he blurted, "$730!"
"Technically it would be $732, given that it's Leap Year and all..." I joked. "Okay, let's say you decided to give up pizza altogether and saved that $730 instead."
He waved me on.
"If you invested your savings and earned just 5% interest, after five years... guess what?" After a pregnant pause, I continued. "You'll have earned $70 short of a grand. If you extended that to 30 years, your grand will have ballooned to over $3,1oo."
He finally had an aha! moment. "Ahh, so compound interest is almost like an invisible force?" he asked.
I winked. And then added, “Always remember: if you wish to get rich, immediately start viewing the word ‘saving’ as a nickname for earning.”
II. Gates' Law = the Law of Growth
Because no idea is original, perhaps the "genius" simply removes the letter ‘K’ — from what people Knew yesterday — and repackages it as new today.
When Bill Gates famously said, “Most people overestimate what they can achieve in a year and underestimate what they can achieve in ten years,” from that point on this insight became known as Gates' Law.
Is that so?
Upon closer inspection, it's apparent Gates had merely rephrased Einstein's above-mentioned insight. After all, Gates' so-called law merely dusts off Nature's age-old law of growth.
As Einstein wisely points out, compound interest is the world's most powerful. Why? Simply put, the world itself originated from, well, plain ole compound interest. After all,
💡 14 billion years worth of compound interest grew the newborn Universe from less than a millimeter to stretching across infinite space.
In short, the power of compounding reflects reaping huge rewards from sowing a series of tiny, small choices.
III. The Takeaway
“Look deep into nature, and then you will understand everything better.”
Einstein’s habit of studying Nature and then trying to mirror her behavior, in his science, was wise indeed.
Nature has successfully run her business of life for some 3.4 billion years now, after all. And as Einstein notes, if you observe Mother Nature at work, it’s apparent she’s mastered the art of simplicity.
Nature doesn’t grow the oak tree overnight. No, no. Instead, by a series of baby steps — day by day — she slowly grows the seed...
...And then suddenly, one day, the farmer glances out back. It dawns on him that what once had been a tiny acorn now towers as a giant, 100-foot oak tree.
If you truly grasp Nature’s 3-billion-year-old process, dear reader, you’ll abruptly understand why Einstein was convinced: compound interest is the most powerful force in the world.
When extending your hand during rainfall, the tiny raindrops appear harmless. Yet if that rainfall persists, eventually it'll build up until flooding an entire city.
That's the power of compound interest...
When the beginner writes her first page, she's initially discouraged. Yet if she persists in writing just a page day, by the year's end she'll have finished a 365-page book.
That's the power of compound interest...
When the beginner saves his first $10, he's initially discouraged. Yet if he persists in saving just 10 bucks a day, by the year's end he'll have saved $3650.
That's the power of compound interest...
In short, it's better to jog just one mile a day for five consecutive days than it is to sprint five miles on one day yet relax for the remaining week. Life is a marathon, not a sprint.
After all, Einstein said it best:
💡 "Compound interest is the most powerful force in the world."
