Stop Looking For Shortcuts. Start Compounding Small Amounts of Money And Skill Instead

There is no easy way to build wealth. If there were, everyone would already be rich. As Charlie Munger says:

“It’s not supposed to be easy. Anyone who finds it easy is stupid.”

There are no shortcuts. One thing I learned from Naval early on was that every “get rich quick” scheme gets the person selling the scheme rich, not you.

Stop cutting corners and start focusing on creating value instead. Start compounding small amounts of money and skill and watch it grow for decades.

How Do I Get Rich Like You, Only Faster?

Charlie Munger and Warren Buffett know how to get rich because they’ve done it. Buffett has compounded his money at a higher rate than anyone else in finance. And the question they get most often is: how can I do what you’re doing?

Here’s Munger’s answer:

“We get these questions a lot from the enterprising young. It’s a very intelligent question: You look at some old guy who’s rich and you ask, ‘How can I become like you, except faster?’ Spend each day trying to be a little wiser than you were when you woke up. Discharge your duties faithfully and well. Step by step you get ahead, but not necessarily in fast spurts. But you build discipline by preparing for fast spurts... Slug it out one inch at a time, day by day, at the end of the day -- if you live long enough -- most people get what they deserve.”

Everybody wants it right now. That’s because we have easy access to instant gratification and cheap dopamine. Everyone wants the quick rush and no one wants to delay gratification for years.

But that’s how you build wealth - slowly, step by step for decades. Be patient but move quickly.

Time is The Greatest Compounder. So Start Right Now.

The sooner you start compounding your skills and small amounts of money, the more you’ll have later.

Here’s the most important thing to remember about compound interest: The greatest gains come at the END of the compounding period.

Warren Buffett is worth about $86 billion. The majority of his wealth (99.7% of it) was created after his 52nd birthday. That’s the power of compound interest - it takes a while to get going, but over 20-30 years, it will change your life.

And it applies to more than just money. Here’s Naval explaining how you can apply compounding to all areas of life, from The Almanack of Naval Ravikant:

“All benefits in life come from compound interest, whether in money, relationships, love, health, activities, or habits. I only want to be around people I know I’m going to be around for the rest of my life. I only want to work on things I know have long-term payout… When you find the right thing to do, when you find the right people to work with, invest deeply. Sticking with it for decades is really how you make the big returns in your relationships and in your money.”

Do less for longer. If you find something you love, go all-in with long-term partners and do bigger and bigger deals over time as friction goes down.

You have to compound for a long time at the beginning for what seems like inconsequential results. But always remember that the biggest payout comes at the end. So stick with it.

Great People Have Great Outcomes… Eventually.

Process matters. Doing the right things for a really long time will eventually work. As Charlie Munger says, if you live long enough, you’ll get what you deserve.

Here’s Naval talking about how this plays out, again from The Almanack of Naval Ravikant:

“One thing I figured out later in life is generally (at least in the tech business in Silicon Valley), great people have great outcomes. You just have to be patient. Every person I met at the beginning of my career twenty years ago, where I looked at them and said, ‘Wow, that guy or gal is super capable—so smart and dedicated’ …all of them, almost without exception, became extremely successful. You just had to give them a long enough timescale. It never happens in the timescale you want, or they want, but it does happen.”

My wife and I talk about this all the time: it never happens on the timeline you want it to. It often takes 3x-10x longer than you think. To save yourself a lot of suffering, think in decades, not years.

If you keep up good habits and improve a little each day, you’ll get out what you put in.

Thanks for reading.

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ARTICLE SOURCES

Naval Ravikant’s site: https://nav.al/rich

Jorgenson, Eric. The Almanack of Naval Ravikant: A Guide to Wealth and Happiness. Magrathea Publishing. Kindle Edition.