Compounding interest is life’s most valuable phenomenon.

It’s often discussed alongside money, where it is a simple mathematical equation. For example, let’s say you had $100 and earned a return of 20% per year for 5 years.

Here is what it would look like:

• Year 1: $120 | Income: $20
• Year 2: $144 | Income: $24
• Year 3: $173 | Income: $29
• Year 4: $207 | Income: $34
• Year 5: $249 | Income: $42

Overtime, your income will keep on growing because it compounds.

Returns are not always positive though.

Sometimes they are negative, and history is littered with peopled who have lost everything you have chasing high returns.

Compounding interest isn’t just a financial term though. It exists everywhere.

Our Collective Knowledge

Today, humanity’s collective knowledge is vast. It wasn’t always that way though.

Before we were able to write, every piece of information was passed via word of mouth.

The amount we could retain was limited to the collective memory of a group of individuals.

Then, 5,500 years ago in Mesopotamia, the first written language was invented.

From that point on, knowledge began to build upon itself.

Sometimes it grew in massive spurts during periods such as the Renaissance Era.

Other times, it shrank in times of upheaval, like the public burning of books in 1993 Nazi Germany.

On average though, knowledge was constantly built to the point that every piece of public information now fits in your pocket.

We all benefit from 5 centuries of compounded knowledge.

Which all started with someone recording a small, tiny piece of knowledge.

Why Should This Matter To You?

Apart from the fact that compounding is responsible for the device you are reading this on, it is also the most powerful power you can harness.

We all start somewhere.

Some of us have won the lottery and are born into privilege and wealth. I was.

Others are born into poverty, under an oppressive governments, or with extreme disabilities.

Regardless, each one of us has ~73 years (the average life expectancy) to compound our own skills and knowledge.

If you are reading this, then you’re likely on a computer connected to the internet. 4/10 people in this world don’t have access to the internet.

It does necessarily matter where you started though in life. Many people have gone from rags to riches, just like many have gone from riches to rags.

What matters is that every single day you have a choice to add a positive number to what compounds, or a negative number.

You don’t even need to focus on improving 1% better each day. All that matters is that you stay positive.