The last month has been filled with news stories about Joshimath in Uttarakhand. About how this small town has been developing cracks on floors and buildings. A few weeks back newspaper talked about an ISRO finding which showed that the area had sunk by 5 centimeters in 12 days. But is it that these things happened in just 12 days or were a ripple effect of several small changes happening over a long period of time which compounded to the reactions which suddenly became drastically visible.
One of phenomena’s which has baffled scientists for decades is how ice ages could have occurred on earth. Evidence suggests that Earth could have had several ice ages before we evolved to the stage that we are in now. The energy required to freeze such a big planet like earth itself is unimaginable. To unfreeze the earth back will again require an equal or more energy. It is presently believed that ice ages have occurred multiple times on earth.
The general picture that we have in minds when we think about ice age is that of continuous dropping temperatures and snow when freezes out everything and anything that is there in its vicinity. But does it really pan out in that way.
It is a accepted fact that the gravitational pull of the sun and the moon gently effects the earths motion and tilt towards the sun. Like we imagine in our minds it was initially concluded that the additional tilt of the earth’s hemispheres caused ravenous winters which froze everything in its vicinity. But more detailed study led to a very different conclusion.
The ice age begins when a summer never gets warm enough to melt the previous winters snow. The left-over ice makes it even easier for more ice to accumulate the next winter. With snow not melting away the snow reflects more of the suns rays which increases cooling leading to more snow and the cycle continues resulting in a period of a hundred years where the seasonal icepack grows into a continental ice sheet which gets bigger and bigger. This clearly goes to show small changes in lesser and lesser snow melting in every summer leads to a huge build up over a period leading to a huge cascading effect.
This is the power of compounding which plays out not only in ice age but in almost every aspect of life.
It also shows us how such huge changes can be brought about with very less effort if the same is consistently spread out over a long period of time.
There is this interesting analysis about warren buffet one of the worlds richest men and often considered as one of the ace investors who ever lived. Recently read about an interesting analysis about Buffet wealth. If you break down Warren Buffet wealth it leads to a a very interesting analysis. Buffet is believed to have started investing in his teens but what is interesting is that out of his present wealth 99% of his wealth got created after he had crossed 50 and 96% of his present wealth after he had crossed his mid 60s. It is not that all his investments were done after that age, The investments that he started making much earlier in his life really blossomed to the levels that we know about today as he stayed invested over such a long period of time. So, while they were several other people who managed to get much higher and bigger returns than Buffet for short periods of time they gave up after they reached a certain amount of their wealth which was of their liking. Buffet continued investing getting good returns mind you not extraordinary ones which compounded to the results that we see today.
Like we saw in the case of ice ages Buffet was patient enough to continue investing despite having build a fortune much earlier in life and getting good returns (not the highest) over the longest period of time. Another classical example of compounding.
The same happens with the small, small investments that we do if we can be patient enough to continue investing over long periods of time without panicking as the market crashes or getting too greedy as the market soars. I had started investing in SIP(Systematic Investment Plans) with small amount of Rs 1000 monthly about 2 decades back and have seen for myself the compounding effect such small investments have over a long period of time.
This compounding effect is visible in each think that we do in our lives where we get better and better results in whatever we set out to do whether its building better health by consistent workout or improving a particular skill or building capabilities on something new…
So stay focused and even if the results at times takes a bit longer than you had anticipated the compounding effect will start kicking in and the more you keep doing whatever you have set out to do the more the effect of the compounding will be. The reverse can also happen if not addressed when the first signs start showing up as we have seen in Uttarakhand recently.
To know more about such real life compounding effects do subscribe to my new LinkedIn newsletter Rejo’s Biz Bytes and visit my website www.rejofrancis.com
Interesting to read. 🤝