Boring vs. Exciting: Compound Interest

Greetings, Carl here.

If you take a penny and double it every day for 30 days, you end up with $5,368,709.12.

Don’t believe me? Do the math.

Behold, the magic of compounding interest—something Albert Einstein is said to have called the most powerful force in the universe.

But you know what I find really interesting about the doubling penny example? On day eight, you’re only up to $1.28. In fact, by day 15—halfway to 30—you’re still only at $163.84.

Don’t get me wrong—turning a penny into six hundred bucks is great. But you’re still a long, long way from a million.

That’s the tricky thing about compound interest, it starts out really boring.

In fact, the reason most of us don't ever get to see this powerful force at work is because we're not willing to go through the boring part.

Things do get exciting eventually… look at the steep end of the curve.

It just takes a while to get there.

Unfortunately, the only way to get there is to go through the boring part of the curve first.

So be patient.

Very, very patient.

-Carl

P.S. If you liked this essay, I think you'd love Behavior Gap Radio. This podcast is super simple... it's me wandering through the world noticing things about how to align my use of capital (time and money) with what is actually important to me! Listen to the latest episode.