Join us today for an episode about the need to focus on compounding behavior with your money...
Today's episode is focused on how it's not just compounding interest but compounding behavior that helps you win...
In today’s episode about investing in yourself through stewarding your treasures, I talk with you about what it means to have compounding in your money. Why this is more than just Compounding interest but even more importantly compounding behavior. I share why this means that consistent and paradoxical behavior often wins.
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Episode 1200: Compounding Effect
[00:00:00] Scott Maderer: Thanks for joining me on episode 1,200 of the inspired stewardship podcast.
[00:00:06] Scott LaPierre: Hi, I'm Scott LaPierre, a pastor, author, and speaker, and I challenge you to invest in yourself. Invest in others, develop your influence and impact the world by using your time, your talent and your treasures to live out your calling, having the ability to run your life.
[00:00:22] God's. Instead of ours is key. And one way to be inspired to do that is to listen to this, the inspired stewardship podcast with my friend, Scott Mader.
[00:00:32] Scott Maderer: Recognize the fact that you can't ever predict everything or control everything. You're going to be surprised by things in your finances. So you have to set it up where you have safety and room for error, even in a time of surprise. And when you do this over time, You begin to find a way to get control of your money.
[00:00:58] Welcome, and thank you for joining us [00:01:00] on the inspired stewardship podcast. If you truly desire to become the person who God wants you to be, then you must learn to use your time, your talent and your treasures for your true caller. In the inspired stewardship podcast, you will learn to invest in your.
[00:01:17] Invest in others and develop your influence so that you can impact the world.
[00:01:24] In today's episode about investing in yourself through stewarding your treasures. I talk with you about what it means to have compounding in your money. I talk about why this is more than just about compounding interest, but even more importantly about compounding. And I share why this means that consistent, but paradoxical behavior often wins the day as we talk about stewarding your treasures.
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[00:02:17] We've all heard of the idea of compounding and money compounding interest and those sorts of. The truth is that if you do the math, and if somebody back in 1922, just invested about $72,000 and they just left it alone and did nothing, and it compounded at a basic interest rate of let's say 10% they'd have over a billion dollars.
[00:02:47] They'd be a billionaire that family would have a billion dollars in 2020. The truth is of course that's not what happens. Most of us don't actually behave in that way.[00:03:00] Every dollar back in 1922 left alone in the S and P 500, just doing what the S and P has done. Naturally. $1 would've become almost $14,000 in 2020.
[00:03:14] This is the idea of compounding over time. We all understand that intellectually. And yet the truth is we often exhibit counterproductive behavior that keeps us from reaping the benefits of such things. I hear people right now talking about we're about to have a recession, so it's time to sell out and time the market or reposition their portfolios so that it's better for this new time.
[00:03:43] It selling stocks during a downturn, instead of buying when it's down and selling. When it's high, we bought, when it was high and sold, when it was low, doing things like converting it to cash during a downturn, can. A counterintuitive [00:04:00] negative behavior. And yet these behaviors seem like the right ones intuitively because they appear to be rational and safe during a time of concern and uncertainty.
[00:04:12] See, it turns out that the problem with the math of compounding isn't the math, it's our behavior, but the opposite is true as well. There. Books like the compounding effect by Darren Hardy, that talks about how our choices plus our behavior, plus our habits. Plus the compounding effect of time equals our goals, our results the decisions we make, the choices we make, the behaviors that we exhibit, the things we do, how those play out over time with repeated habitual.
[00:04:50] Ends up over time, creating the results that we have that time factor is one. I think [00:05:00] a lot of times we lose track of when it comes to money. We want the easy button. We want things to happen quickly. We want the results to show up in our behavior today. When you start dieting, you wanna lose weight right away.
[00:05:17] When you start saving money, you suddenly wanna have that money today. When you start getting out of debt, you wanna be all the way out of debt immediately. But one of the things I like to point out to people is it took you time to get into the situation you're in. It's going to take time to get out of that situ.
[00:05:37] but the focus needs to be on that consistent compounding behavior that is often paradoxical. It's paying attention to the fact that your past history, your emotional feelings around money actually matters when it comes to your behavior with money. It's paying attention to the fact that there are both risk factors and luck factors that happen.
[00:05:59] [00:06:00] Ignoring those is foolish. It's paying attention to the fact that you have to know what is enough and what is your goal when you start out, otherwise you never find the end. It's about paying attention to the fact that there's a difference between appearing to be wealthy and being wealthy.
[00:06:16] However you define wealth and even more. There's a difference between getting wealthy and staying wealthy as well. Ways to look at the risk around situations and cheat. It's not going all in where if it, you lose, everything goes wrong. It's finding ways where if you win. And if you lose, you still win, you just don't win as much.
[00:06:43] It's about focusing on the freedom instead of the trappings of wealth. There's the idea of what they call the man in the car, which is when you see someone driving a really cool car, you don't think cool driver, [00:07:00] you think cool car and that's true. What's more, a lot of times wealth is what you don't see.
[00:07:08] Some of the most wealthy people. I know don't drive that flashy Ferrari it. It's not about the appearance of wealth. It's about the reality. Paying attention to the fact that you're saving money is important. And you need to recognize that you need to exhibit reasonable behavior. I prefer that over the word, rational behavior, we talked about the rational investor, but the truth is we're emotional beings.
[00:07:35] We seldom coldly rational when it comes to our financial decisions. And so admitting that and understanding that becomes, I. Recognize the fact that you can't ever predict everything or control everything. You're going to be surprised by things in your finances. So you have to set it up where you have safety and room for error, even in a time of [00:08:00] surprise.
[00:08:01] And when you do this over time, you begin to find a way to get control of your money in a way that you've never had before. Thanks for listen.
[00:08:13] Thanks so much for listening to the inspired stewardship podcast, as a subscriber and listener, we challenge you to not just sit back and passively listen, but act on what you've heard and find a way to live your calling. If you like this episode on the stewardship of treasures. You can sign up for our treasures tips by going to inspired stewardship.com/treasures or text in the us 4 4, 2, 2, 2 treasures tips.
[00:08:50] And we'll send you five weeks of our best tips on stewarding your treasures until next time invest your. Your [00:09:00] talent and your treasures develop your influence and impact the world.
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Consistency is one of the biggest factors leading to accomplishment and success. – Byron Pulsifer
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