Three pillars of life

Three pillars of life
Showing posts with label stock exchange. Show all posts
Showing posts with label stock exchange. Show all posts

Tuesday, July 7, 2015

The power of compounding - Knowledge

The third instalment in The power of compounding series is devoted to knowledge.

I frequently recall some thoughts out of which one is-

'The human brain is the only thing which makes us the dominant species on earth.'

Therefore we must use our super brain to our benefit to get the most.

Ever read the law of 80/20??

The law states that 80% of the work is done by our 20% efforts and to get the remaining 20% work done we have to put the remaining 80% efforts.

This means that to perform efficiently you must have to concentrate on those 20% efforts which gives the 80% results. And in todays world, knowledge is the power. Knowledge is that crucial 20% which gives the 80% result. There is a huge ocean of knowledge which is expanding everyday. To do our day to day activities, we need knowledge to make them easier. For example, you can stand in a queue to pay your bills or you can simply activate auto debit facility. This is the difference the knowledge makes in our life. A lot of time spent is saved which we can use for other important activities.

Let's come back to our power of compounding, how does it apply to the knowledge?

Simply speaking the power of compounding works with almost any sort of interdependent things. If you have read my previous POST on how to use power of compounding to increase the miles per gallon of a motorbike, you will understand it quickly.

In the above example of auto pay, you are saving time, but if you have knowledge of what to do in the saved time then your efficiency will be much higher. Suppose along with the knowledge of auto debit facility, you have the knowledge of analysing businesses listed on the stock exchanges, then you may use your saved time in finding a good investment opportunity and who knows you may find an investment opportunity for a lifetime, which can further help you retire early from your job, which will further free up a lot of your precious time.

So the amount of time saved is compounded when two ways of saving time are combined.

Here in the same case knowledge also got compounded, now you also have knowledge that these two things when combined can make you financially free much early in your life. Also now you know that you have an investment opportunity and to benefit from it you must save money and the necessity of spending time in researching the stocks, the necessity of saving time etc. So the knowledge also got compounded.

First you knew A & B and from that you derived B, C & E, who knows you might find more things than I did.

This is how knowledge is compounded.

But to compound you first need to start accumulating knowledge.

This is not a difficult thing to do. Start observing things. Stop promoting yourself or proving your greatness to others, (I found most of the people doing it all the time), but I am fortunate enough to understand it in the childhood itself. Actually it was an accident. When I was 10, one day after coming home from school I was so bored and there was nothing to do, the last class of science was lingering in my mind, so I just thought to dig in to it. So I took out the textbook and read the lesson again, I found it interesting, so I read the next one too. The next day, during the science class I was answering all the questions asked by teacher and everyone was impressed by me.

What I learnt from this experience is that learning is fun and good for you, also real hard work or understanding or knowledge doesn't need any promotional efforts. You don't have to prove your greatness. Just become great and everyone will know. You don't need to be great in what others perceive to be great. You just do what you enjoy to do, but do it with full effort and whole heartedly. Others will recognise it automatically once your greatness achieves a critical mass.

Pretty big lesson for a 10 year old kid. But I understood it and started reading first my science book, (science was my favourite subject) then the next years book, then next then next, and in between when bored, some other subjects too.

That's how my knowledge building process started. Because of which I never have to study separately for the exams (pretty amazing, isn't it!!!��). During exams also I never quit my routine of watching Disney hour for 2 hours in the morning, I just loved the Duck tales, Tale spin, Quack pack etc. And later in the college too, though not cartoons, I used to watch a lot of discovery or national geographic channel. They are great source of audio visual knowledge. We can understand better when we see it or hear it or both. Just be selective about what are you reading or watching or hearing, the world is full of noise, so you have to sift the useful knowledge from it.

I just received a joke on WhatsApp related to our topic. Here it is-

During a robbery, the bank robber shouted to everyone in the bank:
"Don't move. The money belongs to the Government. Your life belongs to you."

Everyone in the bank laid down quietly.

This is called "Mind Changing Concept" Changing the conventional way of thinking.

When a lady lay on the table provocatively, the robber shouted at her:
"Please be civilised! This is a robbery and not a rape!"

This is called "Being Professional"
Focus only on what you are trained to do!

When the bank robbers returned home, the younger robber (MBA trained) told the older robber (who has only completed Year 6 in primary school):
"Big brother, let's count how much we got."

The older robber rebutted and said:
"You are very stupid. There is so much money it will take us a long time to count. Tonight, the TV news will tell us how much we robbed from the bank!"

This is called "Experience"
Nowadays, experience is more important than paper qualifications!

After the robbers had left, the bank manager told the bank supervisor to call the police quickly. But the supervisor said to him:
"Wait! Let us take out $10 million from the bank for ourselves and add it to the $70 million that we have previously embezzled from the bank".

This is called "Swim with the tide"
Converting an unfavourable situation to your advantage!

The supervisor says: "It will be good if there is a robbery every month."

This is called "Changing priority"
Personal Happiness is more important than your job".

The next day, the TV news reported that $100 million was taken from the bank. The robbers counted and counted and counted, but they could only count $20 million.

The robbers were very angry and complained:
"We risked our lives and only took $20 million. The bank manager took $80 million with a snap of his fingers. It looks like it is better to be educated than to be a thief!"

This is called "Knowledge is worth as much as gold!"

Well you do not need to do any illegal things to earn money, there are enough legal ways, trust me.

I am sure that you are also on the same journey for knowledge and wisdom like me. The proof is you are reading this post and that too this far.

Well welcome aboard. Our ships journey starts with reading any small informative article of your interest or use, or even watching a show on discovery channel or national geographic channel but not the news channel(I will tell you why not in later posts). But we just have to be sure to check the validity of knowledge by finding rational proofs or trying to disprove it just like we did in the maths theorems in the college. Don't do it by force, just read or learn what you like, slowly you will start liking the process and it will become a habit.

The pieces of information will slowly sink into your subconscious mind and will start interlinking and compounding.

The interlinking is very important to develop wisdom.

Now a days almost everyone has smartphones, so if any questions come to your mind then draw the smartphone and google it. Don't keep any doubt or question unanswered. Challenge your conceptions, get rid of your misconceptions.

You will find limitless possibilities, every barrier in your path will collapse when you start accumulating, compounding and spreading knowledge. Your view of looking towards the world and yourself will change for the good, you will get familiar with the abundance in the world, abundance of what you want.

Knowledge is one of the few things which grows and multiplies when used or shared.

So let our ship catch some wind, read at least one article of your liking, let's be a little wiser every day, let's find out how deep the rabbit hole goes, you are not alone in this journey, there are countless others on different corners of the world going on the same path, And I am here with you too.

Let's be a little wiser every day.

Have a nice day..

Sumit
The POWER is when,
You use ODDS,
To get EVEN.