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Compounding the right side of self!

By Bamboo In The Wind

Everywhere there is a talk about investments and how compounding takes place with patience and over time. 

Compounding is said to deliver an exponential increase provided you have staying power!

Fair enough. Why is there an emphasis that one must stay invested? Virtually in anything? Despite that, why is patience so elusive that we must be reminded of its importance?

Time and again, we fall prey to acting in haste when all pieces of evidence in history point to the benefits of staying put.

Turns out, we are trained to focus on the near term. One-off exam scores, one-off selections in the team, impulsive buy decisions based on discounts, profiteering from the rising stock market. 

We tend to be happy with winning in the present. Wins justify us having made the right calls.

In fact, we get addicted to instant gratification that kicks in because of being right. It appears that the desire for short-term gains out-does the possibility of a long-term outlook. We want more short-term thinking to prevail. 

Short-term reinvestment events need to recur, and before you know it, we start to find it hard to replicate the earlier successes from short-term thinking. No two different points in time allow for the exact same way of thinking.

Emotions, circumstances, resources, and preferences tend to differ on differing days. They don't apply in the same ways as written rules would. They cannot be. You might say that's only human. Yes, indeed. It's not up to us entirely.

Naturally, there is an effect of that - added risk! The parameters supporting the new decisions are indistinguishable different. What led to success earlier may not guarantee it the same next time.

On the other hand, the long-term entails high risk and exponential reward.  What eliminates there is frequent decision-making. Akin to procrastination. Changing paths due to fear of loss. Fear that we may not make the right call. What plays on our minds is the order of magnitude higher uncertainty the long-term horizon adds. 

Working in adjacency, connecting the dots, finding anomalies, and making the calls. It's a lot of intent work to know the focus of the investment.  

Spotting the long-term areas to invest in, whether personal finances or personal development, is a great skill. If we look carefully. They form the base for long-term organizational bets too.

Compounding then is merely an outcome of an intent, patient commitment to the investments made.

But, what are you compounding, really?


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