The First Rule of Compounding

“The first rule of compounding: Never interrupt it unnecessarily.” - Charlie Munger

Here’s how James Clear on page 201 of the Atomic Habits reiterates and emphasizes this principle. “You don’t realize how valuable it is to just show up on your bad (or busy) days. Lost days hurt you more than successful days help you. If you start with $ 100, then a 50 percent gain will take you to $ 150. But you only need a 33 percent loss to take you back to $ 100. In other words, avoiding a 33 percent loss is just as valuable as achieving a 50 percent gain. As Charlie Munger says, “The first rule of compounding: Never interrupt it unnecessarily.” This is why the “bad” workouts are often the most important ones. Sluggish days and bad workouts maintain the compound gains you accrued from previous good days. Simply doing something—ten squats, five sprints, a push-up, anything really—is huge. Don’t put up a zero. Don’t let losses eat into your compounding.”

My 2 cents. Here’s how I’ve been processing this principle the past few days. This principle can have limitless impact on every part or aspect of your life - health, physical, financial, relationship, etc. If you exercise regularly, the results are immediate. And you can see the improvements daily. The days that you don’t workout or exercise, you soon see the impact as well. The no show days can almost wipe out the good days. Thus, it’s vitally important that one avoids the no show days as much as possible. 33% loss for a no show day, goodness mercy! This is equally applicable to our finances when it comes to Savings or Investing, even in paying debt. The impact is evident. One may choose not to see it, but it’s there. Same with our health - what we eat, drink, put in our body and what not. The evidence is there. The consequences are more dire when it comes to health, especially when we ignore to see the 33% loss day in day out. A 33% loss in anything is colossal, let alone over the course of our lives and in all areas of our lives. Let’s strive to avoid it at all costs. Let’s make all of our days a 50% gain days.

Quote of the Week:

Author Toni Morrison, in The Work You Do, The Person You Are, shares a lesson from her father:

"...one day, alone in the kitchen with my father, I let drop a few whines about the job. I gave him details, examples of what troubled me, yet although he listened intently, I saw no sympathy in his eyes. No “Oh, you poor little thing.”

Perhaps he understood that what I wanted was a solution to the job, not an escape from it. In any case, he put down his cup of coffee and said, “Listen. You don’t live there. You live here. With your people. Go to work. Get your money. And come on home.”

That was what he said. This was what I heard:

1. Whatever the work is, do it well—not for the boss but for yourself.

2. You make the job; it doesn’t make you.

3. Your real life is with us, your family.

4. You are not the work you do; you are the person you are.

I have worked for all sorts of people since then, geniuses and morons, quick-witted and dull, bighearted and narrow. I’ve had many kinds of jobs, but since that conversation with my father I have never considered the level of labor to be the measure of myself, and I have never placed the security of a job above the value of home."

Book of the Month:

“Reading is to the mind as exercise is to the body.” - Joseph Addison

Atomic Habits, James Clear. (I told a friend, if this book does not change my life, yet again; then there’s no hope for me. He LOL. I hope this book will do for you what it did for me).

#lifestyle #habits #change