Continuing on the topic of compound interest, another fact that might not be obvious to people is how much difference a small difference in the growth rate can make given enough time.
To demonstrate this, lets continue with our daily skill improvement example from the last compound interest post. Recall that if you improved 1% a day for a year (365 days), you would end up almost 40 times better than you started (~37.8 times better to be more exact).
Say we think we can do a tiny bit better and improve 1.1% a day. Under this new scenario, we would end being about 54.2 times better than we started the year. That’s roughly 1.4 times better than our earlier outcome, from just a 0.1% absolute improvement in our growth rate.
If we were instead to improve 2% a day, we’d end the year about 1,377 times better than we started. That’s over 36 times better than our first (1% daily improvement) outcome, from a 1% absolute improvement in our growth rate.
So yeah, pretty ridiculously powerful.