Tag: relationships

“All returns in life, whether in wealth, relationships, or knowledge, come from compound interest. Play long-term games!”

Naval Ravikant

Compound Interest Returns

Investments made in small sizes grow over time through the snowball effect, bringing us significant gains. Nick Maggiulli’s book Just Keep Buying is an excellent guide to understanding the snowball effect of investing. A chart in the book clearly shows how your savings and investments compound over time. In the chart below, the dark gray area represents your savings, while the light gray area represents the share of investments in your wealth. As the years progress, even if savings remain constant, the share of investments grows, and by the end of 40 years, it constitutes the majority of your wealth. (Yes, 40 years. Long-term is good. Start investing now! There’s no get-rich-quick scheme.)

Returning to Naval’s initial statement, we’ve illustrated how wealth grows through compound interest. But what about the other parts of your life? You may have saved a lot of money, and your investments might grow so much that you no longer need to work, leaving you with ample free time. But do you have the health needed to enjoy spending that money? Or the social circle to share it with? That’s exactly the question Naval is raising. He says, “All returns in life” grow through compound returns. In essence, everything accumulates in our lives.

Investing in the Future

“Play long-term games” is the less obvious part of this equation. It’s easy to understand, but people don’t want to believe it. We looked at 40 years in the chart above. This is a timeframe you’ll see almost everywhere. When it comes to investing, unless it’s a scam, timeframes typically start at 15 years. It seems those who consistently “play long-term games” in life are the ones who win. Instead of focusing on short-term quick-wins, if you think long-term and evaluate everything through this lens, you’ll become a very different person. Short-term gains—whether in money or other areas—are rarely built on solid foundations. They often rely on chance and are far more likely to be fleeting.

Non-financial areas are equally critical. Don’t neglect your friends and family for short-term gains. You might want to dedicate all your time to work today to earn more money. However, in the long term, this might lead to loneliness. Similarly, don’t forget to discover yourself and spend time on your interests due to work intensity. The true meaning of life lies in these areas. Spending time with your child, chatting with friends, making your family happy—these should be your top priorities in life. Prioritizing money over these could leave you alone when it comes time to spend it. Life grows through sharing. Those people aren’t there for your money. If anyone around you pressures you to make more money, distance yourself from them. Very few people live a materially driven life and experience true happiness.

Money and Happiness

Nick Maggiulli says in his book: “Ultimately, your money is a tool to help you live the life you want.” This is crucial to remember. Money is merely a tool to make life easier; it should never be the goal. It can help create experiences that add meaning and value to your life, but it cannot be the sole source of happiness. The material things you buy with it often provide only temporary satisfaction. True happiness lies in shared memories, unique experiences, and a life shared with loved ones.

Of course, finding what truly makes you happy is a challenging process. Often, we believe material things will bring us happiness. But in the long run, these things lose their meaning and may leave us feeling empty. That’s why focusing on “experiences” in the search for meaning in life, is a far more enduring and valuable strategy. The real wealth of life lies in these experiences and the connections that cannot be bought with money.

I want to share something I noticed years ago at a wedding I attended. It was in a luxurious hotel in Italy, and the guests were quite a high-profile group. Expensive suits, luxurious watches, and a sparkling decor—the atmosphere was like a movie scene. However, when I spoke to the people, I realized that behind this outwardly “wealthy” image, there was deep unhappiness. People with family businesses talked about their conflicts with their fathers, and almost everyone, regardless of gender, mentioned their use of antidepressants. There was plenty of money, but very little happiness. There was wealth, but no joy, no contentment. Instead, there was scarcity, the constant pursuit of more, an inability to appreciate what they had, a senseless race, and depression. This experience confirmed something for me: money does not fill life with meaning; it is merely a tool. True happiness lies beyond what we own—in shared moments and meaningful relationships.

A Long-Term Mindset

Invest in your social relationships. These are your most valuable assets in life. Long-standing friendships, where you can share joy in good times and troubles in bad times, are priceless and irreplaceable. This is a more important asset than all your wealth. Just like your wealth, your friendships will compound and grow over time when you share experiences, making the “long-term” perspective crucial here as well.

Exercise daily for your health. Keeping your body active with even a little exercise can help you maintain your fitness and increase your chances of leading a healthy life in the future. Remember, after a certain age, reaping the benefits of exercise becomes much harder. However, people who have exercised regularly for years continue to see the gains even as they age. It’s a proven fact that incorporating both resistance and cardio exercises is essential for good health.

Investing in your health long-term will yield significant returns in the future. The effects of daily exercise may not be noticeable right away, but you’ll understand them years later.

Knowledge works the same way. “It’s never too late to learn” is a very true saying. Warren Buffett often emphasizes the value he places on reading. He says he spends 80% of his day reading.

Let me admit something: after high school, where I read mandatory books, I hardly read at all—until four years ago. Considering I’m now 40, that’s a very long time. Two factors helped me start reading again. The first was discovering e-books. Reading on an iPad or Kindle was revolutionary for me. The second was gravitating toward books that aligned with my interests. Books on investing, human development, history, meditation, and mindfulness… Once I started reading these, I couldn’t get enough. I became someone who reads 20 minutes every morning and 1-2 hours on weekends. As I accumulated knowledge, I began enjoying books even more. I started taking notes, comparing arguments, and delving deeper into topics as I consumed related content. While much of this knowledge isn’t something I use daily, I feel enriched within. I’ve realized I can apply what I know in various fields and interpret situations more clearly.

By reading about others’ experiences, we can add to our own. The investment in knowledge we make today may not yield immediate returns, but it will benefit us in the future. As Benjamin Franklin said: “An investment in knowledge pays the best interest.”

Play Long-Term Games!

The one unchanging truth is that in every area of life, where you build incrementally every day, month, and year, compound returns can bring extraordinary results. Listen to Naval and play long-term games. Surrender yourself to the power of compound returns. It will take care of the rest. Incorporate the power of compounding into your life with a small step today!

Albert Einstein put it beautifully: “Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it”