THE COMPOUND EFFECT - SUMMARY (BY DARREN HARDY)

The guiding principle for success – whether you want to get more fit, richer, more influential, a better guitar player, even a better sculpturer – doesn’t have to be learned from a $297 online course. If all we needed was more information, then everyone with access to Google and ChatGPT would be enjoying their days in a mansion, have abs of steel and live happily ever after. No, the solution isn’t that complex, it’s much simpler than you might think… We need to get one of the most powerful forces in the universe to work for us. Yes, I really must practice my cliffhangers This is a top 5 takeaways summary of The Compound Effect, written by Darren Hardy. And this is the Swedish Investor, bringing you the best tips and tools for reaching financial freedom, through stock market investing… and sometimes through productivity hacks, too. Takeaway number 1: The Compound Effect is the principle of getting massive rewards for a series of small, smart choices. The formula for success is more or less inevitable, and incredibly simple: Small, smart choices + Consistency + Time = Radical Difference You know, the plane that takes off in New York lands in Stockholm instead of Moscow if the pilot shifts the heading just 2. 4 degrees north. The journey didn’t change much but the end result sure did. Skip that mars bar that you have for a snack on weekdays, and you’ll save some 240 calories. That may not sound like much, and your friends may not notice after the first day, but over a year that’s 63,000 calories, or 8 kg of "flab". Moreover, results oftentimes come in an exponential fashion. You know, if you work 10% longer hours you make 40% more money. That’s something worth thinking about! Taylor Swift, the most streamed artist on Spotify in 2023, earned something like 4x more than the 10th most streamed artist Lana Del Ray. And she’s not 4x better, just a little bit better. The winner of US Open in Golf, Bryson DeChambeau received roughly 2x more in prize money than the number two guy, despite just beating him with 1 single point. JK Rowling has earned and estimated $1b, twice as much as another author who most would consider pretty good, Stephen King. So the results are huge for applying yourself more than the competition – but interestingly enough each step along the way doesn’t feel very significant. This is the tricky part. Most people quit running by week 2 because they are still overweight. Or they stop playing guitar because they are still not exactly a Slash. We’re like this miner here, who quits just before he hits the pot of gold. When our efforts don’t give us any instant gratification, we throw the compound effect right out the window. It isn’t requiring that you have 180 in IQ [which is good for me] or that you have a major lucky breakthrough. But it does require hard work, discipline and commitment. So, how do we make sure that we can apply ourselves consistently and over time? What we need to do is to redirect your habits from the orientation of sabotage that they might be pointing towards right now, towards success. But before we get to that, let’s talk about something that can be both empowering and annoying at the same time. Takeaway number 2: It’s your choice! If there’s one thing to remember from the book, according to the author Darren Hardy himself, it’s to take 100% responsibility for making things work in your life. Your business or career, your relationships, your health. What percentage of responsibility do you have in making your relationship work? 50/50? Because there are two of you, it is half your responsibility and half the other person?

Wrong! You have the power I’ve got the power! Only when you are willing to give 100% with zero expectations of getting anything in return will it work. You cannot demand to be loved, but you can be loveable, and it will immensely improve your chances of being loved too. You cannot demand to have many friends, but you can decide to act in a friendly manner. You cannot demand lots of views on YouTube, but you can decide to put up valuable content regularly. I mean I cannot demand lots of views on YouTube, but I can decide to put up valuable content regularly. Oftentimes what I say here is as much directed towards myself as it is to you. Believing that it is the fault of outside forces that we are where we are today, instead of cleaning up our own shit, is basic psychology 101. It’s so much more comfortable to blame your significant other, your parents, that bully from high school, or heck, even the weather, for where you are today than to accept that you are the creator of your own destiny. But think about what that implies for your future. Until a person can say deeply and honestly: “I am what I am today because of the choices I made yesterday”, that person cannot say “I choose otherwise”. Victor Frankel, a famous psychologist, author and survivor of Nazi concentration camps has a powerful passage in his book “Man’s Search for Meaning”: We who lived in concentration camps can remember the men who walked through the huts comforting others, giving away their last piece of bread. They may have been few in number, but they offer sufficient proof that everything can be taken from a man but one thing: the last of the human freedoms – to choose one’s attitude in any given set of circumstances, to choose one’s own way. Takeaway number 3: How to Fire Your Autopilot? Okay, so I said before that to reap the benefits of the compound effect, we need to redirect your habits from the orientation of sabotage that they might be pointing towards right now, towards success. Have you heard the story of the man and the horse? A man saw another quickly riding by on a horse. He shouts to him: “Where are you going? ” The man on the horse replies: “I don’t know, ask the horse! ”. This is how most people go on about their lives. We aren’t exactly intentionally sabotaging for ourselves, but we are doing something which is almost equally devastating. We are sleepwalking through life. Letting some autopilot make all the decisions. Sometimes your autopilot is advantageous – maybe you brush your teeth every morning and put on the seatbelt every time you enter a car without really thinking twice. But at other times, he is dangerous – maybe you let morning drowsiness make interacting with you before your strong 8am coffee a complete nightmare, or how you are allowing daily stock market fluctuations to affect your psyche. Now Onboard this aircraft there are six emergency exists. And if you aren’t happy with everything that your autopilot is doing for you, you can grab him by the collar and throw him out through one of them. An excellent choice would be the: Two doors at the rear of the cabin, left and right. Or, if the habits are really nasty, you can choose the: Two doors at the front of the cabin, left and right. The autopilot will fight back, but there’s a powerful way to disarm him. Tracking. Tracking has been Darren Hardy’s go-to transformation model for everything that has been ailing him. He’s been tracking his expenses, what he eats, how much exercise he gets, his number of sales calls, choices he took with relationships etc, etc. What gets measured gets managed. Just by being aware you improve your odds of success by a ton. Say that you want to become more successful... With your fitness, alright. First you must understand the underlying variables for success within your area of choice, but typically this isn’t too hard. As I stated in the intro – it doesn’t take a $297 course to understand that you’ll get fit if you spend more time at the gym and you eat healthier. So, here you have two things that you can monitor. Number of hours at the gym and what you eat in a day. Bonus points if you decide to measure everything that works against your goal

so rather than counting all your healthy eating, count the unhealthy stuff. And force yourself to do it just as you indulge in it. You down 2 liters of ice cream, a bag of potato chips and a Pepsi … okay, let’s give you some credit – 2 liters of ice cream, a bag of potato chips and a diet Pepsi. Then you must instantly bring up your phone or logbook and write that down. It’ll be a hassle to do anything that isn’t aligned with your long-term goal of getting fit, and you’ll also feel a little bit sheepish every time you do so. Another one, you want to be more successful... With money. How coincidental. As stated before, by just applying yourself a little bit more than the competition, you can reap huge benefits, so the number of productive hours is a good idea to track. In addition, you should monitor the via negativa variable – Expenses. No, don’t get one of those apps that do it automatically for you, actually write down everything that you buy. Once again, it’s because you’ll make it a hassle to work against your goal and you also feel a little bit sheepish every time you do so. When we’ve achieved awareness, we can decide to ditch the autopilot altogether. Takeaway number 4: Swap Willpower for Why-Power Many bad habits come from instant gratification. If taking a bite of that Big Mac would cause you nosebleeds and fainting, you’d think twice before chewing the whole thing down. Instead, we get a feeling of sensation, and your rational mind will have a very difficult time battling this animal instinct. No – willpower will be as efficient in fighting your urges as that tray that you’ve got your Big Mac on would be in fighting a polar bear. Forget about willpower. What you need is why-power. Connect choices to your dreams and desires. You’ve got to want to get up and go, go, go, for years! Walk this plank and I’ll give you $20. Sure thing! Now, walk this plank laid out between two skyscrapers and I’ll give you $20. No way in hell! Well, your child is standing on a burning platform on the other skyscraper and the only way of saving her is to walk the plank. Sure thing! Makes sense? Not yet, really, no. Alright, let me try and rephrase it: You’ve taken inventory and so you are no longer living on autopilot. You know that you shouldn’t, but yesterday evening you went for the instant gratification of Netflix and Häagen-Dazs rather than squat and bench. What’s going on? Well, you obviously still haven’t gained enough momentum. As you may recall from high school physics – Newton’s first law states that objects at rest tend to remain at rest and objects in motion tend to stay in motion, unless acted upon by an external force. Have a look at this. Vs this. Yes, new habits will be difficult to incorporate to begin with, but over time, they’ll become your new autopilot. You need a strong why to get started. Here, I encourage you to peel the onion that is you. Getting fit is probably not your real dream or desire, we need to go deeper than that. Maybe you are single, and you’ve heard that girls prefer “the V” over love handles. Maybe you are in a relationship, and you’ve started to feel less energetic lately, and you wish to change that. Maybe you think my reasons for working out are lame and you ask ChatGPT for better ones. Aha... Mmhm... Yep. I thought of that one too! I promise! The choice is yours – but make sure that your why lights a fire in your belly. Otherwise, you’ll never walk that plank between the two skyscrapers. Most people won’t. The biggest difference between successful and unsuccessful people is that successful people are willing to do what unsuccessful people are not. Takeaway number 5: 3 Influences Ruining or Boosting Your Momentum I’m going to keep talking about more strategic top-layer stuff on how to achieve the compound effect in this video, but if you want very specific advice on how to get rid of bad habits or create good new ones, head over to my summary of James Clear’s Atomic Habits.

In takeaway 2 we talked about the fact that you must take 100% responsibility over your choices. You have the power. But don’t underestimate the influence of outside forces either. Some of them can really ruin or improve your momentum: What you feed your mind: Are you constantly consuming information with lots of negativity and short shelf-life? Or positive, inspiring stuff that will be useful for a lifetime? Your mind is like a glass of water and it’s your choice whether to fill it with mud or that Evian stuff. Once again, there is an issue here in that mother nature is conspiring against us. Left to its own device, your mind will focus on what it considers most important and that is survival. It will prioritize negative, fearful and threatening stuff all day, if you don’t force it in a different direction. Darren Hardy would advise you to skip that morning newspaper for a book that will teach you a new skill. Moreover, try to incorporate gratefulness into your daily routine, every morning, evening or both. The people you spend time with: You’ve probably heard that we become the average of the 5 people we spend most time with. Who you spend time with affects what attitudes and opinions that you are regularly exposed to, and over time, that will have an effect, positive or negative. Your closet people nudge you into a different behavior ever so slightly over time. Watch out! You cannot hang out with negative people and expect a positive life. So, what is the average income, health and attitudes of the five people you hang out with the most? Does that inspire or frighten you? A life-hack that Charlie Munger came up with is to “make friends with the eminent dead”. With the help of media, we can actually choose who’s attitudes and opinions we are regularly exposed to, even if that person isn’t readily available in your neighborhood or city, heck, even if that person isn’t alive! Your surroundings: Go to places where you feel inspired. Darren Hardy talks about how he used to go to a restaurant in a nice neighborhood where he wished to buy a house eventually. Seeing the nice homes inspired him in his ambition. Also, beware of clutter in your life. The physical, of course, but more importantly, the psychological. Each and every incomplete piece of your life sucks the energy and success out of you like a vampire draining you on blood. Incomplete tasks keep calling you back to the past to take care of them. So, think about what you can complete today to remove such drainage. -Alright gain massive success by just making small smart choices over an extended period of time. -Between stimulus and response, you have the freedom to choose. - Take inventory to raise your awareness of where that autopilot of yours is heading - Motivate yourself with a burning desire to achieve or become something - Be mindful of outside influences. They can set you up for or ruin your success. If you want to learn more about how to implement strong habits into your life and how to get rid of your bad ones, head over to my summary of Jame Clear’s Atomic Habits. Cheers!