There are few things more powerful in the world than the power of compounding. If you spend an extra 1% every day for a year(1.01 to the 365th power) you’ll be at 37.7 at the end of the year. That’s a 1377% increase from where you started.
Doing something consistently in the same way over time is significantly more powerful than trying to spend massive efforts at random points in time. When someone starts excercising and tells me that they went to the gym every day I tell them to back out a bit. They’ll burn themselves out doing that. The same is true about finances. Time in the market is way better than timing the market. The downside of $1000 is losing $1000 while the upside could be and additional $500 or more this year alone layer in subsequent years and at a normal rate of 9% you’re talking about $32000.
If you’re a 20 something and you haven’t started an 401K or a roth, start one now. If you want a model for calculating a wealth target, I have one I can send you. Just email me and I’ll forward it over.
Thoughts on Data, Culture, and Organizational Development
