The Power of Incremental Gains

Over the course of our lives, we are faced with countless choices. What we may not realize is that every one of these choices has the potential to lead us down a very different path. Our future selves might be radically different depending on which choice we make today. But how can we possibly know which option is the right one?

The answer is found in the power of incremental gains. As the saying goes, "You get what you repeat." If we want to predict where we'll end up in life, we must follow the curve of tiny gains or small losses and see how our daily choices will compound 10 or 20 years down the line. Let's take a closer look at what this looks like in practice.

The Power of Compounding

To understand the power of incremental gains, we must first understand the concept of compounding. Compounding is an exponential growth process whereby small initial profits are reinvested to generate even bigger returns over time. In other words, it's the snowball effect in action.

For example, let's say you invest $100 at a 10% annual rate of return. After one year, your investment will be worth $110 (10% of $100 = $10). However, if you don't touch that $10 and reinvest it back into your original investment, then next year, your investment will be worth $121 (11% of $110 = $11). And so on. Each year, your investment will grow larger and larger as compound interest takes hold.

Of course, this isn't just limited to investments. The same principle can be applied to any area of life where small, repeated actions lead to significant results over time. For instance, let's say you want to become a better writer. You could set a goal to write 500 words every day; after one year, you would have written 182,500 words (500 x 365 = 182,500). That's enough to write a novel! Or let's say you want to become healthier and set a goal to walk 10,000 steps daily. After one year, you would have walked 3,650 miles (10,000 x 365 = 3,650). That's enough to walk from New York City to Los Angeles!

It's important to note that these examples only scratch the surface regarding illustrating the power of compounding. In reality, the impact is even more significant because as we continue down the road of total gains/losses, our choices become more and more consequential. This is why it's so important to make wise choices early on in life because they have a ripple effect that can last for years—even decades.

When faced with a choice, knowing which path to take can be difficult. However, if we want to predict where we'll end up in life in 10 or 20 years, we have to follow the curve of tiny gains or small losses and let compounding do its magic. Once we understand this principle and harness its power, there's no telling how far we can go!  

By Dean Miles

Keywords: Business Continuity, Mental Health, Startups