Growth is present everywhere, and world finance is not an exception. Imagine you’ve been proposed a deal with a platform that doubles your money every three days. If you invest $1 today, it will only take you 60 days from your initial investment to become a millionaire. This is what people call exponential growth.
Despite this massive profitability opportunity, why aren’t people investing still? Perhaps, it may be because they don’t comprehend how fast a value can increase.
What is Exponential Growth?
Many academic definitions of exponential growth are flooding the internet, but in simple definition, exponential growth is basically the continuous multiplication of something. It shows a data pattern of great increases with passing time.
For instance, you ventured into an investment that doubles your investment every passing year. After the first year, you would have $4. In the following year, you won’t just be getting another $2 but doubled the amount of $4, giving you $8. Your investment will grow by a factor of 2 every year.
Exponential growth is widely used in medicine, chemistry, and finance, attempting to calculate the growth of a particular thing in its own space.
Compound interest is the causality of exponential growth, serving as one of the most powerful profit drivers in the financial world. Even with little initial capital, investors are able to gain large sums of money.
People find it challenging to apprehend this complex yet straightforward concept. Three main reasons are found accountable why some people can’t seem to comprehend it.
Here are the common grounds of those who have exponential growth bias:
Education
The things we know now are fruits of education, whether through formal academic teaching or experience. We could never learn anything without education, and the same goes for exponential growth— many people aren’t well-versed when it comes to it because they are not taught about it in the first place.
Some thought they knew exactly what it was, but not until the pandemic happened—the massive exponential growth from seventy cases to one thousand to hundreds of thousands, reaching millions of cases around the world. The pandemic was a clear-cut case of exponential growth.
In the United States, exponential growth gets taught at 9th or 10th grade, making it a lesson that can easily be abandoned in the higher years. So, although others actually understand the concept of exponential growth, they fail to use their knowledge to their advantage.
Students get bombarded by tough formulas and equations, but there’s little to no lectures are given on how these equations can be used in the real world.
Another education-related problem when it comes to exponential growth is financial teachers’ scarcity. Schools and universities can’t afford to pay expensive financial teachers, and other professional teachers don’t feel qualified to teach it.
The whole exponential growth financial course isn’t also a part of the Scholastic Aptitude Test (SAT), making the entire course appear to be unnecessary. This is why the financial value of exponential growth often slips past students.
However, there is still a chance waiting for people who weren’t able to learn finance mathematics in school. And that is, through experience.
Experience
The moment you experience the joy of earning exponential growth through your investment, there’s a higher chance that you’ll get addicted to the feeling of having your money grow on its own.
Penelope Douglas isn’t wrong when he quotes that experience is the best teacher. Even without academically backed knowledge, people who are interested in knowing exponential growth can still flourish through observation and practical contact.
Experience will allow you to internalize everything you are actively doing. Although there’s a big chance of failing, pursue learning investing because you can never really comprehend exponential growth without seeing them for yourself.
For instance, Bitcoin was once called a “scam” until they saw people becoming millionaires by investing in this digital currency investment scheme. It wasn’t just about the experience but also the vision that made them reap the benefits of believing in cryptocurrencies.
If you were a woman who invested a few dollars in a business and acquired a 50% increase in your investment after three months, what would you do? Perhaps, there’s a chance that you’ll re-invest larger amounts to make the most out of your money.
With experience, you will have the understanding that a particular investment is worth striving for. This is why individuals who profited from exponential growth invest pretty consistently.
On the other hand, those who haven’t experienced exponential growth will think that it’s a fraud. Truthfully speaking, the world really has a lot of investment scams, but there are plenty of legitimate ventures too.
Unfortunately, people who never benefited from exponential growth will always find doubtful excuses to avoid investing.
Expenses
You might have noticed that the richest investors in the world consist of smart people, and among them is Bruce Kovner, a former taxicab driver.
Kovner supported himself while studying at Harvard by working as a driver. Even after he graduated from the prestigious ivy league school, he remained on the ground, continuing to drive his taxicab around.
Currently, the former Harvard graduate is worth $6.2 billion. Kovner has invested in his skills in macro trading and has established a hedge fund company, CAM Capital.
Kovner illustrates that you can be a billionaire even with a small amount of money if you have the wits to grow it.
In contrast to what most people think that investment is only for the rich, you can start with baby steps in your investment journey. It would surely take you quite a lot of your time but starting now gives you the advantage of starting early.
If you don’t start now, you might not be able to catch up. Create long-term investments that will reduce the overall initial expense of investment.
As obvious as it may seem, people who have debt have little to no opportunity to invest to gain exponential growth. This is because they are more focused on making ends meet and paying off obligations.
However, if you are among people who are sinking with debt, make it your goal to pay them fast and begin investing as soon as possible. Don’t be afraid to start. You don’t have to commence big. You only need to start investing now!
Considering everything, the major reason people aren’t investing is because of lack of education and experience and fear of the expenses involved. This may be why they rather spend their hard-earned money on things that bring instant gratification, like cars, luxury items, and expensive modern houses.
Exponential Growth Ahead of Us
Exponential growth is almost present in front of every one of us, from our savings to retirement accounts. It has shown up countless times in real-world, actual situations. The most famous example is computer technology’s Moore’s Law.
Gordon Moore, the Intel co-founder, observed that the number of transistors that can be put on computer chips doubles every two years. This doubling observation has revolutionized the global economy through the exponential growth of computer power in the past decades.
The computing power isn’t the only thing growing exponentially. Back in the 1960s, a single transistor costs $1, but $1 can now buy 10 billion transistors, which are way faster and better than the old models.
When it comes to today’s investing, exponentially growing stocks can help you take home big gains than ever.
