Translating the compounding equation

 

I have always been fascinated by symbols. A corner of my brain is occupied interpreting meanings of symbols, equations, etc. Something simple could reveal a lot, it is largely a matter of perception. 

Take the example of  the compounding equation. It says A = P*(1+r)^n. This is probably the most famous expression used in finance. A is the amount, P is the principal, r is the rate, n is the number of years. It does indeed mathematically produce a result that is much higher than the principal.

However, Is this just a matter of an algebraic expression ? The problem with this approach is abbreviation. I have never been a fan of abbreviation, one - it keeps everything open to interpretation, two - different valid interpretations can have very different meanings. 

Let me re-write the equation to simplify it; Result = Input*(1+ rate of interest)^time factor. Doesn't that widen the scope of understanding a little bit ?

Input = Effort

Interest = Attention

Time factor = Patience

Result = Result

Now, an important factor to consider is that the dimension of human emotions is not present. Therefore, any application of this to a situation with human emotions may not work. However, it does apply to everything that is not modified by emotions - investment, skills, healthy living, etc. 

In easier words;  Result = Effort*(1+Attention)^Patience! 

The real value is seen by recognizing the result is an exponential function, not linear. It increases exponentially with time spent (patience). 

Something more that is easy to miss - The exponential growth is not even noticeable until the "time factor" becomes sizable. The results are not going to be noticeable until effort continues for a sizable amount of time with some amount of attention. 

The underlying factor that gives a significant result is patience, but it requires consistent effort and the attention given modifies the pace of the result! The equation seems mathematical in nature, but translate to easy to understand words, it says - "the surest path to success is perseverance". 

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