Issue 34 |💡From Vicious Circles to Virtuous Cycles: How Compound Interest Shapes Your Life, One Small Step at a Time.
Life is not linear but circular. Which flywheel are you on right now?
IoNTELLIGENCE is the Playbook for Professional Success, Personal Transformation, and the Pursuit of Happiness.
🚨 The Big Idea: How an investment concept holds the key to getting the life you want.
🔧 What To Do Next: Follow this Four Step Process to get out of a rut or start your transformation.
🔬 Go Deeper & Get Smart Fast: Read “The Compound Effect.”
📖 Reading Time: 5 Minutes
How do we gain weight?
Contrary to popular belief, it’s not one colossal meal or a weekend binge (though they don’t help). The truth is much simpler: one French fry at a time.
The average American gains 1-2 pounds a year from college to middle age. That may not seem like a lot until you realize that your 50-year-old self weighs 30 pounds more than the svelte figure you cut as a 20-year-old student—and that’s on the low side of the curve!
Another way of looking at this is that little steps - good or bad - add up. This is true not only for health but also for many other aspects of life: wealth accumulation, relationships, and even your sense of well-being.
Aristotle said that “excellence is a habit. We are what we repeatedly do.” This insight applies to everything in life. You may not realize how crucial those everyday actions are to determining outcomes and delivering the flourishing life you desire. Why? Because the most powerful force in human behavior, like in investing, is compound interest.
🚨 The Big Idea
As a strategic advisor and executive coach, I am often called upon to help my clients navigate periods when things aren’t going their way. These moments worsen when their challenges appear to bleed into and even reinforce each other. It's not uncommon for them to start “catastrophizing” and connecting all of these disparate setbacks into an overarchingly negative narrative.
Here's what I discovered: when faced with tough times or seeking to transform yourself, the solution is the same: you should focus on small, even tiny, changes that compound over time and create positive momentum.
Life is not linear but circular.
When I began to think about this idea, I realized that everything that matters in life requires small shifts rather than dramatic transformations. Little moves lead, eventually but inexorably, to significant changes.
Consider happiness, a topic that is always top of mind for me. While we might think that delight comes from signature events like big promotions or amazing vacations, the reality is that contentment is found most reliably in quotidian pleasures. As the saying goes, how we spend our days is how we spend our lives.
But here's another huge reason why small moments matter: whether we realize it or not, there is no such thing as standing still. We're all getting better or worse, and your micro-decisions will determine the polarity and direction of that momentum you're unwittingly building.
Are you in a Virtuous Cycle or a Vicious Circle?
Feedback loops are much more frequent than we realize.
Let’s return to the notion of fitness: you’ve let things slip a bit, and you're suddenly out of shape. The will to resist that Tiramisu weakens, making your weight problem a little bit worse. Going to the gym was always hard, but now it's downright painful and embarrassing. Workouts suck, and what's worse, the endorphin high you usually get from a great HIIT class just isn't there (because, in another compounding effect, fit people enjoy a more significant positive physiological reaction to exercise than unfit ones). The result: you go to the gym less, further compounding the problem. Before long, it’s been months since you sweated on purpose - and you’ve put on an extra ten pounds in the meantime. You see where this is going. A vicious circle has set in.
Let's flip the script. You push through those painful first few workouts and see some progress. This encourages you to keep going, even increasing the frequency and intensity of your efforts. Regular exercise gives you more energy, and after burning 500 calories in that spin class, you are better equipped to say no to the Frappuccino. You now are in the flywheel of a virtuous cycle.
Wellness guru Dr. Peter Attia preaches that “the compounding effect of continuous training is powerful.” Unfortunately, the cumulative effect of not training is more potent than that of training. If you don't keep it up, you will lose fitness way faster than you regain it. That's why I always say it's easier to stay in shape than to get back into shape.
I believe that most of life is experienced through either a downward spiral or a forward loop; virtually none occurs in some steady state of “maintenance.” This is true of fitness as well as of happiness. Neuroscience tells us that people experience events more positively when in a good mood. Conversely, if you’re feeling down, you're more likely to interpret neutral events as negative, further dampening your perspective and unleashing a pessimistic spiral.
I completely agree with Naval Ravikant's sage observation that “All the value in life, whether in wealth, relationships, or knowledge, comes from compound interest." I would add that these cycles can be virtuous or vicious.
That holds not only within our principal pursuits but also across them. Being happy makes it easier to be healthy, which is a big part of happiness. The reverse is also true.
As performance coach Brad Stulberg points out, “You don't need to feel good to get going; you need to get going to give yourself a chance at feeling good.”There is a sound neuroscientific basis for this: Evolution has primed us for action. Dopamine can rise when you plan to do something, but it spikes even higher when you act. Productive steps are self-reinforcing. This is why taking constructive actions is critical when feeling unmotivated or apathetic: even one step forward unlocks a squirt of dopaminergic pleasure and starts your flywheel spinning in the positive direction.
In Evolution, as in life, compounding is where the magic happens.
🔧 What To Do Next
Stop the Vicious Circle. When mountaineers graduate to climb big peaks, they have to learn the art of “self-arrest.” They train on how to plunge their ice axe into the mountain to keep them from sliding off the cliff face if they slip. We need to learn how to do the same: before we can ascend, we need to stop our freefall - and it starts with realizing that if we're not going in the right direction, we're actually headed in the wrong direction. Unlike mountains, life offers no plateaus.
Take just one step in the right direction. This could be as small as packing a gym bag with your gear with the intent of going tomorrow morning. It could also be opening that email you've been avoiding for fear of what it might contain. Perhaps it's starting that conversation you've been dreading. Whatever the challenge you're facing, making one tiny move forward to resolve it will alleviate some of the anxiety you're experiencing and start a positive feedback loop in your favor.
Let momentum take over. Now that you've changed the polarity of your situation, the flywheel starts to spin and have its advantageous effect. Change happens even faster if you feed it, so lean into those new habits and mindsets.
Repeat as necessary. As any sports fan knows, momentum is a fickle muse. Whether you're shooting free throws, playing poker, or trading derivatives, you can't seem to miss … until the magic suddenly stops. Rather than lament your new lot in life, get started on a new streak.
Virtuous Cycles compound over time. So do Vicious Circles. Pick the wheel you want to be on - but realize you’re on one right now.
🔬 Go Deeper & Get Smart Fast
If you have a few hours, 👓 “The Compound Effect” by Darren Hardy.
If you have under 10 minutes, 👓 this post on “The Power of Creative Momentum” by Srinivas Rao.
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Brillant!
Once more..