Must-reads
Slow but steady wins the race. A steady 1% growth can go a long way. The first growth is just on the initial investment, but every consecutive growth cycle also compounds on the initial investment plus the growth of previous cycles.
A €10.000 investment with 1% growth will increase to €10.100 with €100 worth of growth. In the next cycle, €10.100 will increase to €10.201 with €201 worth of growth. That’s already €1 creeping in out of nowhere compared to the expected €200 growth you would have on just the initial investment. The more compound growth cycles you can add, the better.
In finance, the Rule of 72 is an estimator for the amount of time needed to double your money.
t ≈ 72 / r
where t is the number of periods required to double the investment, and r is the interest rate as a percentage per period.
This effect will return in the chapter on financial health, but is not limited to just finances. In fact, you can use this principle in all areas of life.
t ≈ 72 / r
where t is the number of periods required to double the input, and r is the growth percentage per period.
A €10.000 investment doubles to €20.000 in 12 years against 6% interest per year.
t ≈ 72 / 6 ≈ 12
An initial 10 pushups doubles to 20 pushups in 7.2 weeks against 10% repetitions increase per week.
t ≈ 72 / 10 ≈ 7.2
Being the person that you are, you can become a doubly good person in 72 days against 1% personal growth per day.
t ≈ 72 / 1 ≈ 72
Not all scenarios can be expressed in measurable numbers. A monetary increase from €10.000 to €20.000 is easily measured. Becoming a better person is a vague measurement. Take care when expressing growth in these vague metrics. See those as inspirational and motivational rather than a hard truth.
This principle relies on the possibility of a constant growth rate. In some scenarios there might be a capped growth or a diminishing growth rate. A monetary increase from €10.000 to €20.000 is most likely not capped by the economy and you could even extrapolate this growth beyond what is realistic as an individual. Increasing pushup repetitions from 10 to 20 is within the realm of possibilities, but there will eventually be a physical limit to unrestricted growth. Can you do 30 pushups? 300? 300.000? It is not suited for precise calculations in every area of life, but often good enough as an estimator.