Compound Interest is the 8th Wonder of the World.
We all live with this superpower, and it can either help us or hurt us. What we are never taught or told, is that compound interest rules EVERYTHING. Erosion is the compounding interest of water wearing a mountain down to a molehill. Pollution is the compounding of interest from a billion litter bugs working in consistent harmony, each singing to themselves “this little bit won’t hurt.” And yet it does.
Compound interest makes it easy for us to indulge in self-harm. Damage accrues and accumulates as surely as the profits in Charlie Munger’s ledgers. We all do it as we are all unaware of the damage that we are doing. And we think that the damage we do to ourselves is temporary, easily reversed.
That is a fallacy, and compound interest is the means by which we erode ourselves. We erode our mental stability by sleeping a little less. We erode our fitness by eating one extra dessert, or by refusing to quit smoking as “we are just social smokers.”
Compound Interest may be the 8th Wonder of the World, but it is likely the cause of most of the Tragedies of the World as well.
Will it create wonders for you, or will we be silent witnesses to your own personal tragedies?