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  • Writer's pictureCalvin

Compound

I’ve been watching a lot of personal finance videos on YouTube these days. And one of the common advice that they give you is to invest your funds into a stable low-cost index fund and keep it there for the long-run. For years. For decades even. Because that investment will compound throughout the years that you hold it for.


At first, it may not seem like a lot. Maybe in the first year, you will only get a 5 to 6% bump in investment value. But over time, maybe in ten years, you will see that investment double in value! It’s really a sight to behold and it’s one of the true powers of how to build wealth patiently.


I am trying my best to adhere to this advice, although I’ll admit that sometimes it is easier said than done, particularly given the volatile nature of the stock market these days. Will you be able to stomach a large drop in value and still be willing to hold your investments even though everything seems to be crumbling before your very eyes? It is more psychological than it is logical.


But compounding has worked wonders over the years and can be seen across society as a whole outside of finance. If you yourself get just 1% better every day, you can see tremendous results and benefits most likely within just a year. Of course, it is up to you to judge and rate just exactly what it means to be “1%” better every day. But the principle and guideline are still there.


Long story short, improve the best you can every single day. Read an additional chapter in that book. Do an extra set of exercises at the gym. Wake up ten minutes earlier than usual. Learn a new recipe to cook in the kitchen. Make a new friend at the coffee shop. Little things like that can build your worth and you will see positive improvements down the road.

Little improvements on a daily basis can truly have lasting results. Even if it can sometimes take years or decades to reap. Just last year, I used to wake up “late” every day for work. I couldn’t explain exactly why. But at times, I would find myself waking up at 10:00 AM in the morning on a weekday. Given that I have the privilege of flexible working hours, it doesn’t necessarily have dire consequences. But still, I would prefer not to take advantage of that ability and still work during the “normal” hours that other people do.


Little by little, I made it a case to wake up slightly earlier than the day before. I also took advantage of landmark opportunities to unintentionally change this habit. A few times per month, I needed to send my girlfriend out to the airport to catch her early morning work flight. And that forced me to wake up earlier than usual, sometimes at 5 AM or even earlier!


In addition, late last year, a new European business opportunity presented itself to me, which motivated to similarly wake up early in the morning on the East Coast of the USA, in order to catch up with their business hours over there on the other side of the Atlantic.


These moments present opportunities where I could slowly adjust my sleep schedule to one that I preferred, which was to go to sleep earlier and to wake up earlier. That coupled with my own intentions to feel like I have an extra half day to be productive led me to eventually be able to wake up early.


It’s actually something that I’m relatively proud of! Even though, I’m sure the majority of the people are just rolling their eyes since they’ve always been waking up this early to catch their work schedule or to take care of their family. So, I don’t take it for granted.


I must say though that these efforts and habits do have a way of shaping how you proceed with the rest of the day. If you eat healthier, you tend to be able to make better decisions. If you surround yourself with a better group of friends, you tend to similarly live a healthier and more fulfilling life. If you learn to manage your stress, you similarly tend to see your life slowly improve before your very eyes.


Sometimes, it takes significant patience to see actual tangible results. Because compounding can work wonders, but it does so ever so slowly and gradually that you barely notice on day one or day two. It’s a constant gradual process that changes almost as slowly (or even slower) than the melting icebergs or the growing of grass. But it is happening, and you just need to have faith that the process is working.


So, don’t worry about making that sudden impact in someone’s life. Many things in life don’t come immediately. It’s a gradual growth. Have the patience to practice the right process and the right habits, even without the intention of needing something tangible in the distant future, and just have faith that things will work out in the end.


As the Nike slogan famously says, just do it. I would add, just do it “for the sake of doing it”.

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