The Triumph of Today


The day I got my first monthly pay check ($600) my father urged me to open an investment account and put $100 of my salary into it every single month of my working life. I thought it was a good idea, a little conservative but good nonetheless, and I followed his advice for a few years. Then I got distracted by the other things I needed and could buy with that $100 each month. I felt sure that as my salary grew the $100 would become increasingly trivial. I was wrong. My father assumed but didn't explain to me the compounding power of consistency.

The human mind finds it hard to grasp the astonishing magnitude that results from the compounding effect of consistent behavior. It is easiest to see this result in financial investment, but its benefits are equal in the investment of any consistent human energy.

Consider the return on investing $1,000 a year at an average rate of 10% per annum for 10 years. Most people evaluate this opportunity as a 10% return opportunity, and they do not give it focused and consistent energy. They lose interest easily and quickly get distracted. Some people however, grasp the compounding effect of consistent investment. They understand that their total investment of $10,000 will yield over $17,500 a return of 75%. They see it as a 75% return opportunity and make sure to stay with the program until it delivers. The world is made up of those who get the compounding effect and those who do not. If you are among those who do not, do yourself a favor and download Darren Hardy's gem of a book (free), The Compounding Effect: Multiplying Your Success One Simple Step at a Time. The exponential benefit of compounding lets you turn small things into huge things because you are compounding what you have over and over again. If you folded a piece of paper in two, and then did that again and again, it would take only 42 foldings to create the thickness equivalent to the distance from the Earth to the Moon! My intention in this article is not to promote sound financial investment practice; Darren does that more brilliantly than I could. I want to draw two powerful lessons from the idea of the compounding effect. Firstly, any investment you consistently make, compounds on itself over and over again. Investing something into your children every day, your spouse or partner, your employees or customers, will yield a compounded return over time. This is because the impact of your action does not stop with the action itself. A human action almost always sets up a human chain-reaction. The person or people in whom you invest even small gestures of upliftment, enlightenment or enthusiasm, infuse some of that investment into other people they touch The impact of your initial action carries forward with ever increasing momentum and wider reach. In Lead By Greatness I describe how, soon after the start of my career, a towering spiritual leader said to me: You think of your interactions with others like a chemical reaction, changing one molecule at a time. But humans don't function that way. We are not mechanical, and your connections do not follow the laws of mechanical physics and chemistry. You are a spiritual being, and every time you meet someone a nuclear reaction occurs, not a chemical one. A nuclear chain reaction can release several million times more energy than a chemical reaction. Each person on whom you have some impact can in turn affect the lives of countless others. The effect is exponential. Some thirty years after this conversation, the British Medical Journal published the results of a twenty-year study by Harvard social scientist, Dr. Nicholas Christakis, and his political science colleague, James Fowler, at the University of California, San Diego. The study showed that emotions can pass among a network of people up to three degrees of separation away. As Time magazine commented, your own joy can affect "how cheerful your friends' friends' friends are, even if some of the people in this chain are total strangers to you."[i] Think about the number of people you engage with in a week, and how many people each of them mix with, and how many people there are in that network three degrees of separation from you. The number could be well into the millions!

Christakis and Fowler were not even talking about the effects of your actions on others; they were just talking about the way you feel. But consider how easily a small action can change the way another person feels: a smile, a pleasant comment, an affectionate touch. When other people feel in some way uplifted by your act of caring, they in turn are likely to act more caringly with the people they meet. This just amplifies the extent of the chain reaction you trigger each time you engage with someone, however briefly. This is the compounding effect of human relations.

The second lesson to draw from the compounding effect is that the investment that generates the highest value is the very first investment. In my example of the $1,000 invested annually for 10 years, the first $1,000 yields $2593 after 10 years of compounding at 10%, a return of nearly 160%!! The second year's investment yields a lower return, and the last year's investment only yields 10%. This gives you an idea of the opportunity cost of procrastination. By starting next year instead of this year or tomorrow instead of today, you lose the investment with the highest return: the investment of today in the future of tomorrow. The Tyranny of Tomorrow should be seen through the prism of the Triumph of Today.

[i] Park, Alice. The Happiness Effect, Time. December 11, 2008.

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