You will have noticed that over the past few weeks, I have really dialed back on the number of “quantitative” posts.
Instead, I like to use December downtime to reflect on everything that has happened over the past twelve months.
Work finally slows down. Clients become less demanding. There’s an opportunity to spend extra time with the family.
In other words, it’s a perfect set up to help refocus the mind on the really important things in life.
Urgent projects and to-do lists fade into the background. Dreams, aspirations, and priorities come to the fore.
Thoughts and ideas bubble up to the surface. Waiting to be mulled over, refined – and ultimately implemented as I look to hit the ground running in 2021.
As it happens, one of the themes I’ve been coming back to repeatedly over the past few weeks is compounding.
The Eighth Wonder Of The World
This is when I’m supposed to wheel out that Einstein quote about understanding compound interest.
Except I won’t.
For one, I think it’s one of the most overused expressions in personal finance. I am also quite confident in your ability to use Google.
Most importantly, it’s because I am thinking about compounding in a non-financial sense.
For the moment, forget about your “number”, whatever it may be. Instead, imagine you’ve got a different goal in mind:
Writing a book
Learning to play chess
Running a marathon
Getting that next promotion at work
[Insert your own secret goal here]
Now, I am not a writer, but I am pretty sure that sitting down to write whenever you feel inspired does not make one.
Likewise, going out for a run whenever the weather is good (and you hadn’t knocked a few too many pints back the night before) will hardly build enough stamina to help you go the distance.
However, sit down to write for just 30 minutes a day, every day, and a year in you may well notice that the words you’ve typed into your laptop actually make sense.
Make a habit of putting on your trainers and closing the door behind you at 7 am sharp, rain or shine, and all of a sudden there’s an extra spring in your step.
A marathon may still be out of reach – but knocking off a 10k could well become a routine achievement.
It won’t be instant. On the contrary, you won’t even notice that discrete moment when what used to be a distant, blurry goal suddenly comes into focus.
But make no mistake – progress is being made with every word you type, every time you put one foot in front of another.
Consistency is the magic word here. Apply yourself for weeks, months, and years – and good things will happen.
In other words, you simply have to stay in the game.
It all sounds great but sadly, we’ve only considered one half of the story here.
Yes, small incremental improvements in your lifestyle can amplify the quality of your life in unimaginable ways.
Unfortunately, the opposite is also true.
A cigarette won’t give you cancer.
A serving of French fries and a sugary soda won’t make you obese.
Taking a work phone call during playtime won’t jeopardize your relationship with your kids.
But repeat all of the above long enough, and you are guaranteed to put your health and relationships in danger.
And the further down you go, the harder it is to work your way back up. Not impossible, but you certainly aren’t making your job easier.
Kind of like trying to build wealth while being saddled with six-figure debt.
Reaching For The Stars
This is the time of the year when many people set their New Year resolutions.
Sixty or so days from today, most folks will have binned their aspirations – only to repeat the process again in a year.
The problem here isn’t a lack of dedication or imagination. The real culprit is the belief that in order to achieve extraordinary results, you’ve got to put in extraordinary efforts.
That’s simply not the case. Just ask anyone who has what you want. They will attest that their own journey didn’t start with a quantum leap forward.
Most likely, it was a tiny, wobbly step in the general direction of their long-term goal.
The only secret is that once they’ve taken that first step, they didn’t stop.
And neither should you.
Thank you for reading!
About Banker On Fire
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Banker On FIRE is an M&A (mergers and acquisitions) investment banker. I am passionate about capital markets, behavioural economics, financial independence, and living the best life possible.
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