37.8 or 0.03

Amar Pandit , CFA , CFP

Amar Pandit

A respected entrepreneur with 25+ years of Experience, Amar Pandit is the Founder of several companies that are making a Happy difference in the lives of people. He is currently the Founder of Happyness Factory, a world-class online investment & goal-based financial planning platform through which he aims to help every Indian family save and invest wisely. He is very passionate about spreading financial literacy and is the author of 4 bestselling books (+ 2 more to release in 2020), 8 Sketch Books, Board Game and 700 + columns.

Does this headline remind you of something?

Compounding is what I was trying to get at.

As you know, compounding works in both directions.

Can you guess the number of times you would improve (in a year) with a 1% daily improvement?

Let me give you the answer.

(1.01)365 = 37.8

On the other hand, if you were to dip 1% daily over a year, the result is as given below.

(0.99)365 = 0.03

For most people, a 1% improvement daily is a real possibility, and you can actually achieve it. On the downside though, most people might not decay so fast, but they decay at a rate that is not visible to them. The worst part is that they can’t even feel it.

I see so many firms in our industry slowly decaying. The unfortunate part is that they can’t see it, because of the mark to market appreciation in the value of their assets.

What’s happening with you and your firm?

It’s time to make a realistic assessment of where you truly stand.