Unlearning Compound Interest

A basic principle in personal finance is compound interest - the idea that if you invest money early it compounds into a large sum by the time you retire. Thus, time is your best asset.

While learning personal finance is extremely valuable and worthwhile, learning about compound interest influenced my relationship with risk. If I take risks right now whether that be travelling, sabbaticals, or working on my own projects, this has financial implications. That money spent can compound later on. I’m fortunate that I’m working in an exciting and high paying profession, and that salary combined with making the right investments is a guaranteed path to financial freedom. Would I be willing to take money out of my investment accounts to time off or fund my own projects?

Compound interest is only magical if you make a reliable source of income every year, mainly through a salary. While there’s nothing wrong with a traditional career, I’d rather have my life be defined by what I create then where I worked. While I’ll still keep my finances in check, I’m prioritizing growth and experiences over financial upside.

September 5, 2021

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