21Feb27 | The Compounding Effect

I recently realized almost every book I read touches upon the concept of compounding.

It’s mind-blowing how one thing can affect money, business, learning, relationships, and health. The most alarming truth about compounding is its capability to lead to results you cannot predict. That is when you start something new, you have some expectations about the trajectory. But compounding doesn’t work like that.

Compounding states that when you stay long enough, you witness results that wouldn’t have made sense any other way. Every time you stop what you’re meant to do, you’re taking one step towards depriving yourself of seeing this kind of exponential results.

“The first rule of compounding is to never interrupt it unnecessarily.” — Charlie Munger

Everybody knows about the role of compounding in investing. But rarely do we talk about it in other contexts, when in fact compounding is what shapes every reality. I’ve read before that the way you’re living right now is massively influenced by decisions you’ve taken earlier in time, usually measured in years. Doesn’t mean that you have control of all variables that can assure you the future life you want, but rather it is a game of bettering the odds. One variable that compounding greatly help with is luck.

When you’re able to stay the course, you kind of create your own luck. Your odds with being lucky get intensified each time you’re doing your craft. What’s cool about this is that the idea itself contradicts what we know about luck. Luck is luck? No. Luck can be influenced or better yet forced. And when you think about it, compounding is the only thing that actually forces your luck. When you’ve been doing it long enough, experimenting, iterating and improving, you become the type of person who doesn’t mess with luck. In fact there’s no way left for you to become “not lucky”; you literally create your own luck.

There is this mantra around “hard work” that I used to believe in. But now I just believe in consistent work. I need not to work hard everyday, I just need to be consistent at what I am doing and show up. Short-term hard work never led to better places. But sustained spikes of good work is what I am aiming for.