Successful life needs exponential growth-compound interest thinking model.

compound interest method is a method for calculating interest. Compound interest means that after each interest period, the remaining interest should be added to the principal to calculate the interest for the next period. In this way, in each interest-bearing period, the interest of the previous interest-bearing period will become the principal of interest-bearing, that is, to generate interest with interest, which is also commonly known as "rolling interest".

The simplest compound interest formula is as follows: income = principal ×(1+ interest rate) number of periods

There is also a simpler rule of 72

In fact, the so-called "rule of 72" is to interest at 1% compound interest. After 72 years, the principal will be doubled. The advantage of this formula is that it can be calculated quickly.

For example, the annual interest rate of 8% will double the principal after 9 years (72/8); The yield of 12% will be doubled in about 6 years (72/12).

1. The initial growth is always too slow to detect (as shown in the above figure)

2. Before the inflection point comes, you need to wait for a long time. Once you break through the inflection point, the growth is very rapid (showing exponential change), and the change will be so huge that you will be shocked.

3. It is very difficult to maintain long-term stable compound interest

1. Compound interest of wealth

Let me give you the simplest example in life: the interest calculated from your money in the bank is simple interest, but the interest calculated from your credit card debt is compound interest.

2. Compound interest of knowledge

What kind of knowledge can generate compound interest is very important for personal growth.

Compound interest of knowledge means that creative (reproductive) knowledge can generate new knowledge and new ideas.

uncreative knowledge (which cannot be propagated) cannot generate new knowledge, and can be copied in batches. There is a lot of uncreative knowledge in search engines and social networks.

For example, after reading this article today, you have mastered the thinking model of compound interest, which can be used continuously in places such as study and investment in the future. And if you watch "Chinese aunt Paris fighting street dance?" You can only chat with others after reading this kind of joke, and then what?

Knowledge like thinking methods and thinking models is creative knowledge. When you acquire thinking methods and master thinking models, you can move to different fields and use them continuously. And many cold jokes, cold knowledge, etc. are all uncreative knowledge, and you know they can't be transferred and applied to other fields.

neither the compound interest of wealth nor the compound interest of knowledge can happen without the catalyst of time. When you are impatient or lose confidence, think about the compound interest curve, and then continue to act and wait for the turning point.

Einstein said that compound interest is the eighth wonder of mankind. Munger also regards compound interest as one of the most important thinking models. He said that "understanding the magic of compound interest and the difficulty of obtaining it are the core and soul of understanding many things".

When you have the thinking of compound interest multiplication, you can transform your life in different dimensions

in order to be richer. Start financial management now, and invest some money every month and year.

for health. Start doing some exercise every week now.

in order to become an expert. Start focusing on a certain field now and practice deliberately every day.

in order to improve cognition. Start studying now and form a good habit of lifelong learning.

in order to have good social relations. Start to maintain the feelings between relatives, friends and colleagues regularly now.

compound interest is the most basic model that guides us, and many useful concepts in life are based on the concept of compound interest. A good way to better understand the concept of compound interest is to explore its relationship with other concepts.

The exponential distribution and normal distribution represented by compound interest represent a considerable part of the laws of this world. Usually, people's height, weight and age all meet the normal distribution, while the accumulation of wealth and knowledge meets the exponential distribution, which is suitable for the concept of compound interest.

and this is why mediocre people emphasize fairness and excellent people emphasize opportunities.

most people will never use compound interest in their whole lives, and they will not realize the power of compound interest. Compound interest thinking requires us to look at things with a development and long-term perspective.

compound interest is the most basic model that guides us, and many useful concepts in life are based on the concept of compound interest. A good way to better understand the concept of compound interest is to explore its relationship with other concepts.

1. Matthew effect

In order to learn English well, you work a little harder than others at first, and after a period of time, your English is a little better than others, so the company will call you when it needs to have a meeting with English customers, and you will be more inclined to look for you when there are training opportunities, and you will get more opportunities to practice English than others, which in turn will lead to your English being better. After this repeated strengthening for a period of time, you will

In the Gospel of Matthew in the New Testament, it is said that whoever has more should be given to him, so that the more the better. This is the Matthew effect we often talk about, and it is the powerful effect of compound interest that plays a role.

In order to find a good job, you decided to improve your weight and learn another foreign language. You chose to study Spanish instead of French. At this time, you will give up some job opportunities that require French, and the compound interest effect that you may have in that part of time can no longer be used in French, so opportunity cost is an important factor to consider in choosing the compound interest direction. This is also the reason why it is more important to keep the principal in investment than to seize the opportunity, because without the principal, it means losing the opportunity to turn over the market, which means that when you encounter an investment opportunity, you can't grasp even the low opportunity cost.

So Buffett said that there are three iron laws for investment: "The first rule of investment is to avoid risks as much as possible and keep the principal; Second, try to avoid risks and keep the principal; Third, firmly remember the first and second articles. "

When you understand the powerful power of compound interest effect, you can't wait to use it. Maybe you want to start many things at the same time, such as fitness, musical instruments, reading and so on, in order to prolong the time of compound interest. There is nothing wrong with this in itself, but you can't ignore the principle of putting things first. Starting a number of complicated affairs at the same time may result in that you can't finish anything, that is, compound interest has not accumulated enough time on anything.

So please let go of this delusion, stick to the principle of putting things first, and only put one thing in the most important position at a time to ensure that the most important thing for you fully enjoys the fruits of compound interest effect, which is far more practical than going hand in hand. For myself, when I have the impulse to learn many skills, I will make sure that one thing is the only important thing. If I only have the mood or perseverance to do one thing one day, I will always ensure that it can be carried out.

interest rate is equivalent to the concept of speed to some extent, and it is not easy to keep moving forward at a constant speed. However, there are always a few people in the crowd who can increase the speed of progress, that is, have acceleration. Corresponding to compound interest, the interest rate keeps rising with the change of time, which requires that thinking can be broken through from time to time. Their secret is to master the first principle, and when we look at things, we can return to the origin of things and have the possibility of gaining acceleration.

critical mass refers to the mass of fissile material required to maintain nuclear chain reaction. By analogy, when knowledge and technology are accumulated to a certain critical point in the scientific field, new technologies will explode like fission reactions and expand dramatically. And this extended curve is exactly the same as the compound interest curve, and the compound interest curve also has such a critical point, which is the tangent point of this curve and the maximum angle. After this point, you really begin to enjoy the benefits brought by compound interest.

The exponential distribution and normal distribution represented by compound interest represent a considerable part of the laws of this world. Usually, people's height, weight and age all meet the normal distribution, while the accumulation of wealth and knowledge meets the exponential distribution, which is suitable for the concept of compound interest. This is also the reason why mediocre people emphasize fairness and excellent people emphasize opportunity.

interest is calculated with 1% compound interest. After 72 years (72 is an approximate number, the exact value is 1ln2), the principal will be doubled. This rule is called the 72 rule. It is an inaccurate fast algorithm. For example, if the compound interest is 1%, the principal will double after 72/1=7.2 years.

according to the different trigger conditions of the loop, all enhancement loops either show exponential growth or exponential decline.

Sometimes it is necessary to pay attention when the time observation span of the system under study is particularly long. Maybe a short period of time looks like linear growth, but in a larger time span, this straight line is only a short period, and the first impression may be misleading. It is actually a part of the exponential curve.

May your life enter the growth path of compound interest as soon as possible.