The Surprising Effects of Compound Action

compound interest

Almost everyone has heard of the wonders of compound interest. It’s wonders are extolled virtually in every piece of personal finance literature you’ve ever seen. A little money, saved consistently, over a period of time yields steadily builds, yielding fantastic results, and allows you to retire, get a mansion and never go bald. At 20 years old, if you save $5,000 for 45 years at 8% interest, you’ll have $1.93 million at 65. The power isn’t in the little money that’s saved. $5,000 is almost nothing in the big scheme of things – chump change. The power is in the continuity of the saving. The unbroken chain of one continuous saving, year after year after year. The power is in the compound action that the saver makes.

We pretend like this is only true in finance, but it’s not.

Compound action affects everything.

How Do You Start Blogging?

One post at a time. Twice a week. In 2 years, you’ll have almost 200 posts written. Congratulations. You’re a blogger.

How Do You Succeed?

One failure at a time. Little by little. Layering a lesson learned on top of lesson learned and soon you have a mini-success.

How Do You Start A Business?

Sell one customer at a time. Then another. Then another. Boom. You have a business.

The answer is more than just action. Anyone can do something one time. In fact, it’s easier than it’s ever been in the history of the world, to act…once that is. Tons of people start stuff – because starting is easy.

Continuous action, doing it over and over and over again, is hard – so most people quit before they build anything significant.

They give up. They go home. They decide it’s not worth it. They don’t know why they bothered to start.

The outcome difference between someone who saves $5,000 one time and someone who does it every year for 45 years is huge. It’s not hard to do once. It’s hard to do 45 times in a row. Similarly, it’s not hard to act one time. It’s hard to keep act over and over and over.

The only answer is to act continuously. Do something. Do it often. Don’t stop.

Keep going.

When things get hard, don’t let it stop you. When everyone else stops, find a door and keep going.

Over time, you’ll create an unbroken chain of compounded action that builds and builds and builds and builds and builds and builds.

Keep going.

Every once in a while, you’ll glance back for a moment and be startled at the unbroken chain of action and the realization begins to dawn on you that you’ve got something you never really thought you could have…and you realize…

$5,000 now is a small price to pay to $2 million in a few years. One small action now is a small price to pay for building something great.

But looking back is only useful for so long. So you face forward, stay focused and do something.

Keep doing. Keep shipping. Keep acting.

Do it. I guarantee you’ll be surprised at what you make.

[photo via puuikibeach]

Comments

  1. says

    It’s amazing how continuous pays off, and what’s more, you start to see the benefits quicker than you think, but as you point out, it’s important not to quit.
    I love the message of this post. Thanks. Dave.

  2. says

    I agree with this. I believe the #1 reason people fail at small business is the fail to understand how long it takes, or they do, and they can’t weather the financial stress period, or maybe they are unable to make lifestyle compromises, for the period of time required for the compounding to happen.

  3. says

    This concept of an unbroken chain was the impetus behind chains.cc. I love this site because it’s a great way to visually track how long I’ve been doing something.

    Consistency and diligent practice have been key to any of the successes I’ve had in life. Good post!

  4. says

    I was just writing about something similar this morning. I think Dan’s point above is spot on. People don’t want to do the small things because they aren’t sexy. We thrive on instant gratification and there’s no way you can accomplish anything of significance that way. Small things add up over time.

  5. says

    This is exactly right! It’s easy to say “oh I’m too busy to post today – it doesn’t really matter” because one post ignored really WON’T make that much of a difference. But do that a couple times a month over the course of 6 months and you’ll be one of many wondering why your blog is a “failure” and no one is reading.

    Bravo for spreading this message! I talked about this concept in my Ten Habits of Blogging Success (linked in my name) because it is SO important for bloggers – for anyone – to understand.

  6. Rita says

    Joel, I love this! I have spoken about this a few times, at various speaking engagements I’ve done recently. It takes something to do something every day. Especially when it’s something you just committed to, to yourself. I recently completed a project called The Year of Hugging Fearlessly. Simple concept. Every day for 365 days, connect w/and hug one new person. Something every single day. It was a commitment made to myself, and then shared it with people while I was out in the world hugging people. I finished my 365th day with my 1014th hug. There were days when I did not want to leave the house to go out and hug someone. But I did. I was sick early in the project, and asked people to come to me, and they did. It really does take something and as Srinivas said above, “Small things add up over time.” I have always wanted to be invited to speak at different events, and my small thing had led me in that direction.

    Keep on keepin’ on.

    Thanks for writing this!
    Rita

  7. Kathy Brown says

    It occurs to me that there is a subtle but important difference between the effect of compound interest on money and actions.

    At 20, the thought of having $1.93 million saved by the time you are 65 seems really impressive. But, taking into account inflation & any changes in the global economic environment (which, as we’ve seen over the last few years, is not an insignificant factor), by the time that 20 year old hits 65, that $1.93 million isn’t going to have anything like the value it did when they were 20. And it has to last them for the rest of their life, however long that might be.

    The effect of compound interest on positive actions however, is not like that. Rather than decreasing in value as time goes by, they will either maintain or increase their value. The wisdom, strength & experience gained will then never cease to sustain us through whatever circumstances we may face. Once they are done, no person or adverse circumstance can ever rob us of them or their effect (unless, of course, we choose to obliterate them with fear, paranoia or bitterness in the future).

    Don’t get me wrong. I’m not saying we shouldn’t concern ourselves with financial investments. They are a necessary practical matter. But if we make investing in action our biggest priority, we will never lose out.

  8. says

    Joel, I agree and subscribe to Taking Massive Action that is consistent over time.

    Compound interest and action is a good thing and should be leveraged consistently over time to attain your goals, whether its your fitness, blog, relationships, self-improvement or a business.

    I’m a huge supporter of systems that can be tweaked to achieved a desired outcome. I think the one ‘factor’ that was left out in your financial analogy that would be beneficial is to include a system that promotes residual income, which could super-charge your compounding effect. It also acts as a catalyst to fuel the compounding engine while at the same time decreasing the efforts and energy required to achieve that goal.

    Lastly, if we continue to do what we always did, we’ll get what we always got.

  9. says

    Thanks for writing Joel! This is something I need to read daily- continuity has always been my issue. And then I forget how joyful it is to write again or to keep pursuing. Everyone has those days where they just “don’t feel like it”- studying, running, writing, whatever it may be. We just need to find a way to get over our own hump that we put there in the first place, and then we’re continuously surprised about how awesome it is. We remember…oh yeah…this is why I started this project. I just need to remember that there is always the other side to the barrier… if I’m brave enough to get over it.

  10. says

    Great post. Thank you.

    I especially love the idea of finding that door when everyone else quits. It’s so easy to look at another’s success and compare ourselves to them, but it doesn’t work that way. We each begin with a unique set of strengths and advantages. The one thing that truly sets apart those who succeed and those who don’t is their ability to persevere and keep moving through the impossible.

    Running taught me a lot about pushing through the challenges and pain to get to the other side (and proved to myself that I could do it!). Thanks for a great reminder that business is similar and patience and faith are key.

    • says

      That Goggins quote has had a huge impact on the way I see things. You’re looking for the door, looking for the door and when you find it, you can either open it and keep going or stop.
      Love it.

  11. says

    Here’s another example: take a photo every day, and post it online. It doesn’t matter what the subject is, or if the pictures are any good. Most days your photos won’t be anything special. Once in a while you’ll be happy with something. Keep going, every day, snap, post, snap, post.

    And then, one day, you’ll check in at Blog of Impossible Things and find your photo at the top of one of Joel’s posts!

    DUDE!!! You used one of my photos on a B.I.T. post!

    Okay, ya wanna know what’s weird? Other than a couple of hobby-centric web sites, there are only two blog sites I regularly follow: B.I.T. and the one by that Kamb guy. A couple of months ago I was floored to recognize, as I read through an article, one of my photos illustrating an NF article. Now, I feel like I’ve really made the big time by having my work featured in a Joel Runyon post!

    What are the odds? I mean, there are literally MILLIONS of photos out there in cyberspace available for use. And there are millions of blogs and web sites. What are the chances that both blogs that I regularly read would happen to use my images, completely at random? It’s not like I’m submitting photos to Joel or Steve for consideration. My photos are just part of the gazillions of Creative Commons licensed photos floating around out there.

    Cool coincidence. And I’m glad you could make use of the pic!

    • says

      Ha :).
      I grabbed the photo and as I went to credit the author, I saw it was you. I was gonna email you, but I thought I’d wait to see if you noticed :). Thanks for making them available man. Really appreciate it!

  12. says

    This is so true. Many overestimate what they can do in a year, and grossly underestimate what they can do in a decade. Taking action toward something everyday is the key…especially the days you don’t want to.

    That is how you achieve the impossible. Thanks for this Joel.

  13. says

    Really enjoyed this motivational post Joel! I found your site via a podcast I listened to on BlogcastFM in which you were interviewed. Great stuff there as well. Being a PF Blogger myself, I naturally picked this post of yours to read first. Very nice correlation. Makes perfect sense.

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