Investing is Exponential, Not Linear

The most difficult thing to get your head around when getting started with investing is that growth is exponential, not linear. People can’t see past the first couple of years which really do feel like they’re linear as compounding hasn’t had a chance to show how magical it can be if given the chance.

Two of the most common replies I have received when talking to people about getting started with stocks are: I’m too old to start or I don’t have enough money to get started investing.

I think both of those replies stem from thinking linear. The person thinks that the small amounts that they have to invest wont be enough and therefore not worth even starting.

Yet if they knew how powerful compound investing was then they would get started today! Your small amounts, no matter how ridiculously small you think they are, will grow over time. The amounts that you invest each month will increase, your dividends will increase (and be reinvested), and the value of your investments will increase.

Eventually your dividends alone will be more than the amounts that you can contribute each month and the snowball effect will kick in. This is where exponential growth becomes magical. Linear growth is thrown out of the window and a chart of your investments will look like a hockey stick rather than a gradual linear incline.

Most will never reach this magical exponential moment though as it’s a hard slog to get there. There’s a thousand dragons to slay along the way to magical growth and if you’re not aware of or not focused on this tipping point, from linear to exponential, then the first few obstacles will take you out of the game.

You’ll quit after having your butt set on fire a few times and then go out and tell everyone with an ear that investing is a mugs game. You’ll be misinforming people and potentially robbing them of their freedom though as it was your ignorance and lack of knowledge that took you out of play.

If you had bothered to arm yourself with knowledge, better tools to protect your wealth, and a concrete goal to reach then you would be sharing a whole different story with others about investing and being free from slavery. You would be sharing the wonders of exponential growth, of compounding machines, and wonderful dividends that increase by 10% every year. Imagine the wage from your current job increasing by 10 percent every year!

Experiencing the transition from linear growth to exponential growth is so frustratingly difficult to share with others effectively enough to get them to take action. I swear I must sound like a preacher sometimes and the heathens are deaf to my message! I’m slowly learning to talk about investing and freedom from slavery only when asked though as the brick walls are tiring.

Better to plant seeds and if they take hold the person might come back in a few months and ask about this whole freedom from slavery thing or how to get started with dividend investing. Then they’ll feel like they discovered exponential investments themselves as they took the initiative.