When I was younger I was learning about the stock market. It was here that I first saw the power of something called compound interest.
If you keep increasing an investment by a certain amount day after day, or year after year, eventually even a small amount of money will be turned into a large amount of money.
The reason this is so powerful is because once you start earning interest you not only earn interest on the money that you originally invested, but you also earn interest on the interest that came before it.
This makes your return much higher than you would initially expect. Let’s take an example, if we have $10 and someone agrees to pay us 1% on that dollar every day for a year after 1 year we would end up with $377.84.
After a little over 3 years that $10 would be worth over $1 million dollars, all because it was consistently increasing by 1% a day.
That tiny percentage over a large time span can turn a small amount of money into a large amount of money.
Now, your knowledge can work in much the same way.
As you learn more about something you get more questions and there is more to learn. You keep learning and improving, building on your knowledge and increasing it in a similar way compound interest increases your money.
This is what I like to call, compound knowledge.
As a New York Trader once said, “If I become half a percentage smarter each year, I’ll be a genius by the time I die.” (from the book Trading for a Living).
The more you learn about a few things and the more consistent you are when it comes to learning about them the more you will pick up and the more you will understand about a given subject.
That’s pretty basic stuff, but hardly anybody uses it to its full potential.
We naturally learn more every day just by living in this world. However, the vast majority of what we learn is useless and will never really help us at all in life.
To use compound knowledge to its fullest and to grow at a faster rate there are 3 simple steps to take.
1. Figure Out What You Want to Expand Your Knowledge On
While learning is always a good thing, it is best to focus on a few areas of life. There are a lot of people who know millions of things about millions of different subjects and this is great, they tend to be very smart people. But to take full advantage of compound knowledge there is a more efficient way to grow.
You can get more from compound knowledge if you focus on learning about just a few things at a time.
As you learn more and more about a specific subject matter you keep expanding and you end up becoming a genius in your field.
2. Decide to Learn 1 Thing About Your Subjects Each Day
The next step is to set aside some time every day to learn more about your chosen topics. You may choose to do this by;
• Reading a Book
• Reading a Blog
• Taking Action and Learning How What You’ve Learned Lives Up To The Real World (Examples: learning to count cards you can go to a casino, learning how to flirt you can go to a bar and practice)
• Watching Something Informative on The Subject
It is a good idea to set aside time to do 1 or more of these things throughout the day and to look back at the end of each day and make sure you have accomplished it.
3. Stay Consistent and Keep Improving
Finally remember to stay consistent. Make a note of what you want to learn and make sure you are indeed spending some time learning every day.
You might want to have a couple different topics to expand your mind in so that you can switch topics, if you ever need a break from one.
Consistency is the main goal here. As long as you keep learning and growing your brain will continue to grow and expand even after you are past your prime.
As you grow you will learn how true it is that “knowledge means power” As you learn more you have more tools to help you in your future. But nothing happens until you pick up a book and start reading it.