The Compounding Effect of Habits

Habits compound. Good ones do, so do bad ones.

Financial knowledge & literacy also compounds with time.

Habits are important because a human being, due to limited intellectual bandwidth & computational prowess, can’t really make optimal real world computations in real-time, at all times. If one tries, then one puts overt cognitive burden on oneself. So errors in judgement are going to happen, the idea is to make fewer and fewer errors through setting up of mental models & systems that will work optimally.

Habits put oneself in the autopilot mode, that compounds with time.

One good habit is exercising 5 times a week for 1 hour, at the very minimum and being close to ones own peak physical form at the given age one is at. Don’t overthink this, just do this no matter what. The compounding effects & longevity of good health cannot & should not be questioned or debated. They just exist and keep oneself happy & healthy after one has achieved whatever else it is that one has set out to achieve.

Same is the case with saving & investing money. At least a small portion of the net income – depending on ones age should be saved and invested aptly. Into businesses one owns and manages, or into other peoples businesses in the form of equity. This habit of savings and investments also compounds with time.

Compounding is relevant to human life. Hence, good habits are relevant to human life.

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