Compound Effect By Darren Hardy
A book that tells you why you should start your investment journey as soon as possible. Darren Hardy has shared decades of data, this data will blow your mind and will teach you why investment is necessary for every human being.
It’s about Compound interest. So if you’re still unsure about investing, this book will ensure that you start your investment journey.
Life’s Last Edit by Rahul Makwana
Think of it as a self-help bible—not just a collection of lessons, but a guide to transforming your life.
Compound Effect Summary
The Compound Effect is the power of knowledge, the more you read, the more you will understand the power of the Compounding effect.
I would highly recommend you buy this book from Amazon and start reading. It’s not only about finance, you will also learn lessons about life and the Psychology of humans.
Whether you want to complete your goals, buy a new smartphone, or start investing. The Compound Effect Book will teach you everything from the ground to the top in simple language.
As the author describes it. Choices + Behaviour + Habits + Time = Compound Effect
- Change your goals into daily habits
- Set routines for a certain task
- Select the Habit and work on it, every day, don’t skip a day.
From Goals to Habits
Let’s say, you want to start reading books every day. So instead of reading at a random place or random time, instantly do this
- Find a place where you can read a book.
- Select the time (ex; I will read the book at 7:00 AM in my bedroom).
- Repeat the same habit for a month.
Remember, read at the same place and same time every day. The day will come and that habit will become your routine.
Now, this may sound easy but it’s not. Adding new habits will take time but if you follow the steps then after 30 days, you will see positive results.
The same can be applied to exercise, writing, learning a new language, or anything else. Just repeat the habit every day for a month… It will be hard but it’s not impossible.
The success formula is to stick to the habit.
In simple words, be consistent.
Mastering Choices
When you wake up in the morning, you have two choices,
- Whether you can use a smartphone or,
- Start reading books.
Now, your mind will choose a smartphone because that’s what makes you happy but
sometimes, you need to step back and say NO.
Everyone has a choice whether it’s about reading books, doing exercise, starting a business, or doing jobs.
Choose the hard things now, and it will give you an easy life. If you choose easy things like endlessly scrolling on your phone, binge-watching movies, or p*rn, you’ll for sure face a harder life down the road.
Building Wealth
I think everyone knows, who is Warren Buffett, right?
So let me share with you his investment journey and see, how Compounding Effect works.
As you can see, if you start investing a small amount consistently every week or month, imagine how much it could grow in five or ten years.
The formula is simple: invest regularly. Yes, there will be days when you won’t feel like investing but you have to keep going. Just invest for the long term, this will make things very easy.
| Investment Date | Regular Investment | Interest (30%) | Ending Balance |
|---|---|---|---|
| 01-01-2024 | Rs 5,000 | Rs 100 | Rs 5,100 |
| 02-01-2024 | Rs 5,000 | Rs 202 | Rs 10,302 |
| 03-01-2024 | Rs 5,000 | Rs 306 | Rs 15,608 |
| 12-05-2050 | Rs 5,000 | Rs 4,913,467.18 | Rs 250,586,826.01 |
I know, 30% is hard to achieve but that is just an example. You can use any of SIP calculator.
Now, following, what Warren Buffett did is not easy but it’s not impossible either.
As Darren Hardy says “The real cost of a four-dollar-a-day coffee habit over 20 years is $51,833.79. That’s the power of The Compound Effect.” –
What the author says, starting your investments early, regardless of the amount. Consistency matters more than size.
Managing Time
If you think you have unlimited time then, maybe take a look at your old photos.
Time is passing every second. So you have to manage your time, don’t waste it on things like watching movies, playing video games, or watching p*rn.
Yes, entertainment is necessary but you won’t have to be entertained 24/7, especially on social media.
Here are a few things that you can apply in your life, see what is important and what’s not.
- Exercise – Important
- Reading books – Important but Not Urgent
- Writing Article – Important (for me)
- Video Editing – Important (for me)
- Posting Videos on all Social Media websites – Important but Not Urgent
- Watching Movies – Not Important or Urgent
- Going out with Friends – Not Important or Urgent
- Buying new Smartphones – Not Important or Urgent
- Playing Video games – Not Important or Urgent
Related: Ankur Warikoo Time Management Course – Take Charge Of Your Time
Similarly, grab a pen and paper and list everything you want to do the next day, noting whether each task is important or not.
Compound Effect Review
The Compound Effect Book will teach you, how to invest your money, how to build good habits and remove bad ones, and how Consistency is key to unlocking your true potential.
Favorite Quotes From Compound Effect
“The real cost of a four-dollar-a-day coffee habit over 20 years is $51,833.79. That’s the power of The Compound Effect.”
“In essence, you make your choices, and then your choices make you.”
“Losing is a habit. So is winning. Now let’s work on permanently instilling winning habits into your life.”
In the end, I would say, if you want to live a comfortable life then make sure you start investing. It could be anywhere but invest as much as you can.
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