Sunday, 6 May 2012
Power of Compounding
The first glass on the left is empty.
The middle glass is half full.
That on the right is full.
Assuming that the liquid is made up of amoeba.
Each amoeba doubles itself in 1 sec.
If it takes 1 minute to fill the whole glass to the brim.
What is the time for the glass to be half-full?
Answer: 59 seconds.
Herein lies the power of compounding.
Note the incremental value of the final 1 second of compounding.
It exceeds the value created by the previous 59 seconds.