This comes the archives of another website I manage:
Apparently Albert Einstein called compound interest “the eighth wonder of the world”, while American billionaire Warren Buffet reportedly said his wealth had come from “a combination of living in America, some lucky genes, and compound interest.” Today ‘the compound effect’ is also the title of a new book by Darren Hardy, and its implications go beyond finance and business.
When it comes to learning, a lot of students actually don’t see how compounding works.
Imagine Pavel, a Praguer who goes to his English class twice a week. That might be all he has time for or all he’s prepared to do, and so his progress will be based on those few hours a week.
Now imagine Barcelona Barbora, who goes to class twice a week, and who does some study at home. Let’s imagine she goes beyond the homework the teacher sets and reads new books, watches American films, and goes out and meets people from other countries. On top of that, she might even use English at work.
Who will make more progress?
The value of compounding means that when they come to class, they’ll be starting from a different point.
Pavel will be following on from the previous week’s lessons, and maybe he’s even forgotten quite a bit of what they did.
Bara will be following on not just from the lessons, but all the other work she has been doing.
Within about 3 months her progress will be greater, and she might eventually have to go up to a higher level class.
That’s the beauty of compounding.
They’re each devoting the same amount of time in terms of weeks and months to their course, but because Bara is putting in more minutes and hours, she will be far ahead of Pavel very soon.
So don’t forget that the homework your teacher gives you and all the other things you could be doing are adding ‘compound interest’ to your learning.
- Originally published February 14, 2014