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The Power of Compounding



The easiest way to understand the power of the law of compounding is to look at a seed of wheat. One seed grows into a fully developed plant, and that plant has created thousands of seeds by the time it’s mature and ready to harvest. The thing about compounding is that it’s a constant. It’s something that happens over time, no matter what. It’s not instantaneous; there’s no instant gratification involved.


Warren Buffett became the wealthiest person in the world using the law of compounding. It’s a natural law. This law works in finances, in relationships, in business—everywhere.

The catch is, the law of compounding doesn’t discriminate; good seeds and bad seeds both produce multitudes of fruit. I had a conversation recently with a group of clients about tumbleweeds. Living here in West Texas, it’s something we’re all familiar with.


A tumbleweed grows from a seed and after it’s grown, it breaks away from its roots and blows away. The plant is dead at this point, but this is when it begins to spread life wherever the wind blows it. To us, it’s a weed, a hassle, but it’s such a great example of compounding.

One tumbleweed plants hundreds, if not thousands of seeds as it travels. Those seeds germinate and create upwards of 250,000 seeds of their own before they break away to begin their own journeys.


We can harness the power of compounding with intention, just as Warren Buffett did the first time he started investing with the goal of earning a little bit every day. He became one of the wealthiest people in the world before donating billions, and is still one of the wealthiest people in the world today at an estimated net worth of approximately $100 billion. He continues to give money away, his lifetime donations to charity exceeding a total of $50 billion in 2023, and because of his skill in harnessing the power of compounding, it still continues to grow.


That is what happens in our lives; we can plant really good things, like good habits, good practices, or good thoughts. We can also plant bad habits, bad processes, and bad thoughts; all of them produce fruit in our lives. It’s up to us if our fruit is healthy flourishing relationships, or relationships that are detrimental and hurtful and continue to create more hurt.


The saying, “hurting people hurt people” is another example of the law of compounding. It’s a progression of repetition. That’s the really powerful thing about it, and if we don’t recognize how powerful it is and are not intentional about the seeds we plant or where we make our investments, there will be consequences that are compounded. It’s a natural law that was put into effect at the creation of the world.

 

The greatest example is when Jesus went to the cross and planted his seed through dying—how many people now have eternal life now due to that seed that was planted?

 

Evidence of the law of compounding is appearing across the world right now; unfortunately we’re seeing how hate compounds hate. We can see that when one group of people wants the death of another group, atrocities begin to take place. Look at what Hitler and Stalin did in World War II, or Pol Pot’s genocide in Cambodia; all of those are examples of compounding working in an extraordinarily negative way.


On the positive side, we’ve also seen compounding of nonviolent protest. Peaceful protest creates more peaceful protest. Gandhi is very popular example that others have followed, as well as Martin Luther King Jr. Both saw an injustice, a wrong, and through planting seeds of equality and the natural truth that we’re all created equal in the image of God, those seeds inspired people to do the extraordinary. They don’t start out trying to be extraordinary, they just make one decision that compounds. Our world isn’t perfect, but the fruits of those actions are visible in our laws today.


The greatest example is when Jesus went to the cross and planted his seed through dying—how many people now have eternal life now due to that seed that was planted? It’s no coincidence that we mark time in relation to before his death and after; it changed life as we know it.


You can harness this power in your life by becoming aware of what seeds have been planted in you. Some people have planted bad seeds that you need to kill, so the compounding effects of those seeds don’t continue. Others have planted good seeds, seeds of hope and joy. Nurture those seeds and watch the compounding begin. This is where the power of words is particularly evident: a curse is a compounding of the negative, while a blessing is a compounding of the positive.


If you think of your life as a garden, the good seeds are your plants, and the bad seeds are the weeds. The weeds use up nutrients your good plants need, and cause them to weaken. By removing the weeds, you allow your good plants to flourish. In fact, the healthier your garden is, the less opportunity weeds have to take root. It’s the same in your life; the more positive seeds you nurture, the less those negative seeds are able to take root.


It's all about making the decision to nurture the good, and weed out the bad.

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