Compound vs Leverage

Which one has the most impact?

Read the last post here:

You’ve probably heard the term compound. I love it in the context of finance - Compound Interest. It means your money is making money for you and your account is growing exponentially over time. This is the best way to get rich.

Compounding a 10% Return on $100,000 over 20 years = over $650,000

Insane Right? My brain initially tells me a 10% return over 20 years would be $200,000 in gains for a total of $300,000 (Initial $100k + $200k in gains) but its not its more than double. And that is power of compounding.

Apply Compounding to Everything in Life

If you can get these type of return with just 10% improvement each year on your bank account, imagine what is possible if you apply this to other aspects of your life.

James Clear popularized this idea with the effect of making incremental changes daily. A 1% improvement every day over the course of a year = 37x improvement.

But Wait, There’s More!

Leverage - I like to think of leverage as a way to compound your compounding results 🤯

Picture This: You started a business and grew your new accounts from 1 a month to 4 a month. That is a 4x improvement, huge! Assuming the accounts stay with you and you keep adding account each year that number will compound.

Now, what happens when you build out a sales team and add 4 reps who can now add 10 accounts a month.

Not only are you growing sales but you are also growing the number of people selling for you. This is leverage.

Anything is Possible with Leverage

Give me a lever long enough, and I shall move the world.”

Archimedes