# Praveen Ramesh

## The REAL Magic Bullet

We grossly underestimate the power of compounding. I want to explain it with an example.

Two people are awarded money for working out. But with a slightly different kickers.

### Person A

He’s offered \$5000 at the end of every month. He will receive this irrespective of how well he performs in training.

### Person B

She’s offered \$10 per week to workout. This amount increases by 10% at the end of every week. All she has to do is show marginal progress week on week.

Let’s map out how much they would have at the end of each month

At the end of Year-1 (Month-12), Person B looks like a stupid for letting go of ‘easy money’.

But wait.. the compounding magic is yet to kick-in…

In Month-16,

• Person B (\$86,762) will make as much as Person-A (\$80,000). Phew finally!

In Month-17

• Person B will make \$127,000. That’s a whooping \$40,000 more than Person A (\$85,000)

And if she keeps going, at the end of Year-2 (Month-24)

• Person B will make a whooping \$2.2 Million averaging \$1.1 Million/year
• Compare this to Person A who will make \$120,000 averaging \$60,000/year.

Massive success are built on small, unsexy, and imperceptible everyday decisions.