More important than diligence is “compound interest at the bottom”, the prophet three days, wealth for ten years.
In this world, time is fair to everyone. Multi-millionaires and ordinary people have the ability to control 24 hours a day. The core reason for the large gap between the rich and the poor is in addition to congenital factors. The gap is “thinking”.
Thinking determines every action we make, every moment of thought and decision. If you want to improve yourself and change the trajectory of life, you must constantly train your “self-thinking way.”
The famous scientist Einstein once said:
The most powerful force in the world is not the atomic bomb, but time and compound interest. I think that besides the two, what determines compound interest is the “underlying knowledge system” and the action-level knowledge system that support the formation of thinking. .
A brief summary of compound interest thinking:
Finding the underlying law of something, making things constantly strengthened according to a certain index of thinking mode, using the interpretation method in the financial scene as “interest earning interest”, the calculation is constantly recurring, and it doubles like a snowball.
The most famous case of compound interest is on the “chess board”:
Put one grain of rice on the grid in the upper left corner, two on the second, four on the third, and so on. The next grid is double the previous one, until the 64th grid, how many can be reached in total What about grains of rice? The answer is about 184 billion, which is equivalent to China’s grain output in 1,000 years.
Economists have also used a formula to describe compound interest: (1+r) N, R represents what you do, N represents time, as long as R is a positive number, that is, what you do is correct, then as time goes by Long, it will bring a miracle effect.
01 The bottom layer of compound interest is “knowledge”
When most people think of compound interest, their first thought will be on “money”. From the perspective of the nature of compound interest, compound interest is not only “money”. In my opinion, its inner core is actually “the way of thinking”, and the way of thinking Behind this is the “cognition of knowledge”.
One-time investment of multiple continuous income is what everyone wants, and it is ubiquitous in our lives. Anything we spend time to do should carry the “thinking” of eating more fish.
Although this is the case for understanding, there is an old saying that every step counts in the road that you have walked earnestly, how? If you use compound interest thinking, the answer is: “what settles down”.
The first step of compound interest I concluded is to “establish a knowledge system” to determine whether the thinking continues to grow. The input of the knowledge system plays a very important role. It is divided into three levels like technology development: application layer, middle stage, and bottom layer. .
- What is the bottom layer: “A person’s knowledge reserve brings about cognitive upgrade”
- What is the middle level: “Enlargement of the circle of capabilities brought about by the expansion of fundamentals”.
- What is the application layer: the realization method brought by the enlargement of the ability circle.
Zeng Guofan once said, “When I was young, I did not study for a day.” Dong Qing, a famous CCTV host, also said in the program: “Any kind of time you spend on reading, you will give yourself in another form. Bring returns”.
If you interpret these two sentences in a superficial way as chicken soup, it can only mean “too little books are read.”
You know, most of the problems we encounter in real life, the predecessors have actually “given the answer”, but we have not found the corresponding method to study all the underlying logic, and learning to read the corresponding book, you can evolve thinking and cognition , So as to find the corresponding way.
1. The bottom layer: the process of thinking evolution
From the perspective of growth, each of us is “repairing the brain”. Through the “input of new knowledge”, we continue to make it the accumulation of the brain’s next thinking material, so that knowledge can continue to iterate at the rate of “compound interest”, and finally Achieve the improvement of self-awareness.
If we do not have a far-sighted vision, we will not be able to realize that every little thing we do around us can accumulate to form a compound interest effect, and the knowledge system is the bottom layer that supports the operation of the brain.
The learning process of our brain is a process in which external information enters long-term memory after short-term memory (thinking). In the process, short-term memory will process external information and “long-term memory information” together, and then store it in long-term memory. in.
At this time, if you don’t have background knowledge related to new information in your brain, it will be more difficult to understand. For example, when we read some history and philosophy books for the first time, we may find it particularly difficult. It takes a long time to understand a sentence. Original intention.
If there is no basic concepts and cognition of relevant content in the brain, it will not be able to effectively process new information, and the form presented is “difficult to understand”, such as rote books and complex physical formulas when I was young.
If we have a lot of relevant background knowledge, it will be easier to understand and think, and then the speed of learning new things will also change quickly. This whole process is a positive feedback.
There is a very important principle in our cognition: we are used to using the known to understand the unknown, and the principle behind it is actually like this.
2. Middle level: knowledge brings enlargement of competence circle
The bottom of knowledge is the method of cognition of the world. From elementary school to university, the essence of all kinds of knowledge absorbed in our brains educate us to recognize everything around us, including the basic theories of each subject.
Although they cannot bring us direct “change behaviors”, they will teach us how to use “the professions we have learned” to produce practical skills that can be realized more efficiently after entering the society.
There is a famous bridge section in Journey to the West. The Monkey King uses a stick to draw a circle on the ground, so that Tang Seng stays inside so that he will not be captured by the monster. The circle drawn by Sun Monkey is the circle of ability. Tang Seng will suffer as soon as he leaves the circle. .
In real life, most people do things beyond the “outside the scope of recognition”. You see that others open a beverage store to make money, and you want to invest, but when you open it, you find manpower and rent costs are subtracted. There is very little profit, and the process of all this is “out of the circle”.
So how can we get the ability out of the circle and make the right decision? The most stupid way is to build the cognitive “underlying knowledge system” of the subject.
The knowledge system is like a spider web. On the web, you can clearly see the connection of each “knowledge point” and the role they play.
And the expansion of one’s own knowledge system can make fragmented knowledge no longer become isolated islands, so that more permutations and combinations can be carried out in the brain. This series of processes is like “laying the foundation”. Once the foundation is firmly established, the subsequent cognitive upgrades It is not a “linear increase” but an exponential development.
If you want to do business, you need to ingest the underlying knowledge system of business to your brain, and if you want to be a market, you need to ingest the knowledge system of “lower level marketing” into your brain.
The knowledge system is divided into “bottom layer” and “application layer”. The bottom layer solves the essence, and the application layer solves the methodology. How to do it, then why learn the bottom knowledge? The core is that “the essence of everything” is interlinked.
The breadth of the application-level knowledge system represents the areas that a person’s ability circle can cover. The wider your knowledge system, the larger the ability circle and the more things you can do.
When I upgrade from “I don’t know I don’t know” to “Know I know”, my cognitive ability circle has been further improved.
3. Application-level knowledge: the realization method brought by the enlargement of the ability circle
Behind the competence circle is the reserve of knowledge. In your knowledge structure, there must be a reasonable ratio between the underlying knowledge and the applied knowledge. The equated sign is “time”.
Let me give a simple example:
You have a plan for investment and financial management, earning about 10% every year, there will be a profit distribution problem at the end of the year, usually you will spend some of it, and then use some of it to continue investing.
What is spent is like “application-level knowledge”. The investment part is your low-level knowledge. This ratio is different at different stages of your life.
For example, when you just graduated and entered the society, you completed the basic knowledge reserve through study, and then learned the skills of applying knowledge at work, and got a fixed salary. Then the sum of “basic knowledge + applied knowledge” is the scope of your “competence circle”.
As the development time lengthens, your underlying knowledge may not change, but application-level knowledge is constantly increasing. For example, you learn how to do operations, how to do marketing, and how to get customers at work, but these can only be The performance of your abilities.
So how does the performance of the ability make it the “bottom”? The answer is to build an “efficient system”. Remember that in the information age, information is worthless, and what is valuable is the efficiency of information processing.
To give a simple example, a novice screenwriter writing a script is often a vulgar imitation of predecessors. After you see it, you will definitely say: “If it were me, the ending must be shocking enough.”
But a senior screenwriter looks at things with a classic three-act ending. The construction of the first act is generally from the perspective of ordinary people, and then the protagonist is exposed, providing enough plot tension, and finally ending.
In the same field, the knowledge difference between novices and experts is actually different. Novices often look at superficial features, while experts often see essential abilities. The so-called big cow is to learn the logic behind everything and divide it into several pieces. Formula power.
Then the output is summarized as a “system”, and finally the effect of amplification is achieved, turning the knowledge of the application layer into a “low-level capability”, and its ability circle is continuously increasing.
With the increase of the ability circle, the ways to realize the return to the application layer are also diversified.
For example, from the original form of only relying on “single sales time” wages, it has developed to diversified sales time, such as “consultants”, “consulting” and “training”. These are all suitable for amateurs.
Some people redistribute funds through more income.
For example, buying stocks, funds, opening a store, and small investment. All these principles are actually the distribution mechanism of “underlying + application-level knowledge”, so there are fewer realizable methods because you have not mastered flexible distribution problems and “cognitive bottlenecks” “.
02 The “principal” of compound interest must be solid
If your bottom layer is not solid enough, the compound interest brought to you by hard work is very small. Everything is the same. If you don’t believe it, you can look at the market.
From the perspective of money, what is the biggest gap between young people and middle-aged people in “compound interest” investments?
The answer is that young people have low capital and slow wealth accumulation, while middle-aged people have high incomes and relatively high risk costs.
Give a simple example:
As a person who has been working for 3 years, your monthly income is 12,000 yuan, which is about 140,000 yuan a year. You use 50,000 yuan as a stock investment. If you accidentally lose half of it, which is 25,000, then you work hard. A few months’ salary can fill this pit.
But a middle-aged person with a monthly income of 50,000 puts out 20% of his total annual income as stock investment. If he accidentally loses 50%, it may take a long time for cash flow to fill this pit.
Although the ratio is the same and the same loss, the core that the former can make up is that “young” can be more dominant, while the latter is “a blow to confidence.”
This example can fully illustrate that young people’s wealth accumulation is not only manifested in the “money level”, but also “knowledge value” other than money.
Then the core of compound interest to do a solid foundation of basic skills lies in the “knowledge value” to be sufficiently stable, so that you will “less detours” in front of the things you want to invest in.
In the performance of compound interest in wealth investment (stocks, funds), the “bottom layer” represents your own principal. When you switch to other scenarios (work, growth), “the principal is your basic ability” .
Only by doing basic skills can you have a better future. How can you make your basic abilities more solid? You must first understand the hierarchy of knowledge in a certain field and find effective information for learning.
Many of our studies on the market can find the source, such as any type of work, operation, market, product, marketing, growth, technology development, etc. you are doing now.
Information can be divided into four hands according to levels:
First-hand information is often difficult to find, usually in a certain field for many years of research practitioners, doctors, and scholars.
They are still being studied and verified. They are fresh thoughts. They may still exist in the minds of these “scholars” and in their notebooks. They have not been processed and published, but the freshness is high.
Second-hand information generally has a high gold content and is a paraphrase of first-hand information. For example, you see books that integrate the underlying logic, such as “The Wealth of Nations”, such as “industry research reports” and “white papers” issued by some authoritative organizations. Organized and refined training materials, etc.
The third-hand information is often a “statement of views that are simplified or extreme for dissemination”. For example, best-selling books in some fields have been changed to “public understanding” to facilitate the dissemination of text, but because it has been simplified, a large number of Cases and stories may be inaccurate in expression.
Give a simple example:
In the marketing circle, most people have read a book called “Positioning”, which mainly talks about “meeting customer needs and seizing the minds of users. It is the famous work of Trout, the father of positioning, and the best business case in American history.”
In addition to this book, there are some “same translation” books on the market, which are very similar in essence, and these books are often made to make it easier for the public to understand.
Four-handed information is “the expression of various motives full of personal emotions”. For example, you often see various fragmented public account articles, with the title of “You can make hundreds of thousands according to this method.” There are also many instructors who interpret “One The Ten Thousand Hours Law” tells you that anyone who works hard can succeed and so on.
Now you can retrieve how long you have spent in the above several kinds of information. In fact, any kind of information is valid, and the core lies in the “method of use”.
From the perspective of compound interest at the bottom, we should grasp the “first-hand information”. In this way, with the knowledge and practice of the “application layer”, the basic skills will be more solid, but the first-hand information is more difficult to understand. It is generally recommended to choose “second-hand information”. “It will be more effective to learn.
How do we find the source of the information we need?
First of all, we need to recognize whether we need a “methodology” level or a “bottom level”. The bottom level is generally more textbooks and professional theoretical knowledge. For example, if you want to learn broadcasting, then a series of “college to undergraduate” The textbook is worth digging by yourself.
If it’s the “methodology” level, you need to look for it in the industry. I generally use to find “good guys” and listen to “dry goods”. For example, if you want to learn e-commerce operations, then find people who are good at e-commerce operations. Buy his books and listen to his lessons.
As the result of compound interest, money is just a way of showing on “something”, such as “opening a store” and “being a company”, but if you want to run it well, you need the support of a “system of knowledge” behind it.
So when we want to make any kind of “investment”, the first thing we should think about is “our own knowledge system in this field” is not perfect enough, it is relatively easier to implement the underlying knowledge, and then learn the “action-level knowledge” some.
03 “How to continue” the bottom layer of compound interest
For money to continue to increase in value, it needs to be invested in an economy that can continue to create profits. Then whether it is the bottom-level knowledge or the “action-level” knowledge that wants to increase in value, it is necessary to establish a complete and efficient knowledge system.
We are looking at the core definition of “compound interest”:
Continuous and stable growth, appreciation, do not pursue rapid gains, and avoid losses at the core.
For the continuation of “low-level knowledge compound interest”, what needs to be done is also “small-scale” learning. The core is “uninterrupted”. Many people often say that they are very educated when they are studying, taking a bachelor’s degree or a master’s degree, etc. I will not study after graduation.
If you get married and give birth to a child, sometimes a function question of “child” can give yourself the answer.
Why is the knowledge we learned will be forgotten?
Learning is not like downloading files from a computer, which can be retrieved in time when needed for long-term storage. The essence of learning is actually based on existing knowledge.
There are about 100 million neurons in the human brain. When we are learning and thinking about new knowledge, the corresponding neurons will be lighted up. When you use and practice frequently, these corresponding neurons Yuan will be stronger.
Sometimes it may even become a conditioned reflex. This knowledge can truly belong to you. On the contrary, if you only think about it but don’t use it often, then the neuron corresponding to this knowledge point will quickly “dim” or even be “forgotten” “.
If you don’t do one thing for a long time, you will have brains.
The same is true for money investment. If you don’t log in to a “fund” account for a long time, and then retrieve it from your brain in a few years, you may have to think about it. If you forget it, not only will the compound interest disappear, but the principal may be found. not coming back.
Therefore, the way to not forget the knowledge you have learned is the ability to “practice more” and “export to the outside world”. Why should we continue to learn knowledge?
Because everyone needs “continuous realization ability”, use brain cognition to support the thinking of making more money.
In the end, you will find that whether it is value or wealth investment, what is bound to compound interest thinking is “lifelong growth.”
Many people’s lifelong learning is the core of the false proposition that “there is no system of their own.” Their brain learning is like quicksand and is gradually forgotten.
An educated person should have a “prototype” in the establishment of his knowledge system.
Lifelong growth after work is to continuously input new skill level knowledge into this system, increase its structural integrity, and solve more problems encountered with the dynamic changes of the market.
The best bottom-level compound interest “lifelong learning” should be to choose a few “valuable long-term issues” and continue to dig deeper, such as how to do a good job in marketing, how to be a product manager, how to manage well, and how to be Good boss, how to make a good financial investment.
Waiting for you to study these issues for ten years, you will find yourself more “more systematic understanding”, and all this can guarantee “your steady growth in this field”.
So don’t be fooled by short-term value. From the perspective of knowledge, growth, and money investment, maybe your initial amount is not a lot, but it is not important. What is important is the “capability of principal growth”.
“Compound interest is not an automated” process, but a process that tests human nature.
If I tell you now that you don’t want to drink from today, you can change a Porsche with the money left over every month after 10 years, would you like it?
80% of people would not do this, so “compound interest investment” is also the same, it is a common sense.
If all the late stages of compound interest can be “Ge Youlai”, those entrepreneurs who have succeeded in starting a business will no longer have to learn. Why do they study so hard? Could it be that you are not happy?
Among the elements of compound interest:
The cognition ratio of the bottom-level knowledge is the same as the principal of money. The “bottom-level knowledge” is equivalent to the cognition within the scope of your ability. , You will have medium and long-term growth.
And how does it last? You need to keep learning, keep focusing on yourself, and overcome all the distractions that make yourself “entropy”, so that you can be a friend of time, like a snowball, and these things are often the most challenging.
04 written at the end
If you want to have compound interest thinking, it is better to learn to “compound thinking” first.
When you look at the interest of other people’s “fund” profits, they are actually paying attention to how your “principal” chips grow.
Rely on principal in the early stage and compound interest in the later stage. The principal is equal to the ability to realize the “capacity circle”, the principal is equal to the recognition of the “underlying knowledge system and the action-level knowledge system”, and compound interest is equal to the “long-term learning ability”. “The underlying logic of compound interest”, the rest is left to time to witness its growth.
