Impact Versus Entropy

Saturday, February 13, 2016 - 21:41

"You either get better or worse, you never stay the same." — Mr. Mancini

Einstein once said that compound interest was the 8th wonder of the world. While many might scoff at this as an over exaggeration, the reality is that our culture's obsession with quick-fix solutions causes us to overlook the power of this lesson. Notably, while changes appear small and insignificant in the beginning, over time they stack on top of each other and lead to massive change.

I recently saw a tee-shirt that highlighted this lesson mathematically (see figure above). It compared the difference between improving 1% per day or getting worse 1% per day. It basically goes like this (and I apologize in advance to those of you that hate math): If you start off with a $100 and invest it in a way that grows 1% per day, you will have $101 on day 1 and $102.10 on day 2. That's boring. But over 365 days in a year, that value blows up to $3,700!

Now look at the inverse. If you lose 1% per day, you go from $100 to $99 on day 1 and then $97.90 on day 2. By the end of the year, you are left with a measly $3. Therefore, there is a 1000X difference between making a 1% improvement per day and a 1% loss per day compounded over a year. And since entropy always guarantees that things will break over time, you're always fighting that 1% decline if you just sit still.

The take home message is simple. Yes, we can all get caught up in the fantasy of winning the lotto and other 1 in a million (or billion) chance events. However, we are all subject to the powerful effects of compounding. Therefore, to make a difference in our lives, we can choose to follow a more tried and true method of taking consistent, daily action towards a worthy goal or dream. Or we can choose to let life just happen, allowing entropy to take over day by day.

Which will you choose?

Which do you choose?

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About Rick Manelius

Quick Stats: Chief Product Officer of DRUD Tech. Author of Winning the Lottery Within. Graduated from MIT in '03 (BS) and '09 (PhD). Life hacker and peak performance enthusiast. This blog is my experiment in creative writing, self-expression, and sharing what I've learned along my journey. For more information, read my full bio here or contact me.