I believed this kind of talk for many years.
"Have a long-term perspective. Believe in compound interest. Time is your best friend."
The worst time was when I plunged into one direction for three years, only to find that I had left nothing behind.
This is not a failure—failure has a definite outcome.
This is how you are subtly led astray by a set of seemingly correct statements, and you still think you are doing the right thing.
It's not that you didn't try hard enough. It's not that you were unlucky.
You believed the wrong thing.
First level: You're focusing on the wrong variable.
When people talk about compound interest, the first thing that comes to mind is the rate of return.
"Is a 10% annualized return enough?" "What are the historical returns of this fund?" "Which asset class offers the highest long-term returns?"
It seems that as long as you find a high enough rate of return, plus time, the money will grow on its own.
I used to think that way too.
It wasn't until I saw the comparison between these two people that I realized I had made a mistake.
There's a hedge fund called Renaissance Technologies, founded by Simons, a mathematician, who has an average annual return of 66%. Buffett's average is 22%. Simons' return is a full three times higher.
And what was the result?
Simmons is now worth $31 billion, while Buffett is worth $110 billion.
The person with a return three times higher only has 28% of the wealth of the other person.
This incident made me stop and seriously think: Where exactly did things go wrong?
The answer lies in the numbers.
Buffett's net worth is $84.5 billion, of which $84.2 billion was earned after he turned 50 and $81.5 billion after he turned 65.
More than 96% of wealth is acquired after the age of 65.
The money earned by a man hailed worldwide as the "guru of compound interest" during the first half of his career was negligible in his total wealth.
His secret wasn't finding a high rate of return.
He started investing at the age of 11, and he lived long enough to never stop.
The compound interest formula has two variables: the rate of return and time.
Everyone is desperately trying to optimize their rate of return, but no one has seriously considered how long they will live.
This is the first layer of being deceived: you think that compound interest relies on finding good investment targets.
No. It depends on time.
Okay, so all I have to do is hold on patiently?
The second layer: "In the long run" is a phrase used to evade responsibility.
There's a quote from Keynes that I saw for the first time, and it suddenly struck me:
"In the long run, we are all going to die."
He said this to mock those who constantly use the term "long-term" to avoid current problems.
Waiting comes at a price. Time is not free.
The premise of "long-term holding" is that the thing is really worth holding.
How many people have seriously thought about this question?
Someone bought Nasdaq in 2000, at the peak of the tech bubble, and then waited. It took them a full 15 years to barely break even.
Someone bought the Nikkei index in 1989, a year when the Japanese economy was booming and everyone believed that "Japan will be better in the long run."
More than 30 years have passed, and the situation is still unresolved.
Those who bought at the top may not be any less foolish than us. They simply believed the same thing: "It'll be good in the long run."
Time itself doesn't give you compound interest.
Only when time is multiplied by a stable positive number will it become so.
If that growth anchor doesn't exist at all, or you've chosen the wrong one, time will only amplify your losses and trap you in it.
Here is an even more painful truth—
When many people talk about long-termism and compound interest, they use the term "anchor point" but what they really mean is "hope."
"I believe it will rise." "It will definitely be good in the long run." "Time will prove me right."
These words sound very firm, like a belief.
But there's nothing in it that can be verified.
You say it will definitely be good in the long run, but you can't define what "good" means, nor can you define how long "long run" is.
This isn't investment wisdom. It's using polite language to avoid a question you haven't even thought through.
I've done the same thing myself.
When creating content, I tell myself, "Accumulate it slowly, and it will definitely be valuable in the long run." But when I post the content, nobody reads it, and I haven't figured out what I'm actually accumulating.
When making investments, I tell myself to "hold for the long term and believe in value." But that so-called "value" is a narrative I construct in my mind, not a reality recognized by the market.
When building a brand, I tell myself, "Compound interest will work its magic, so it's okay to lose money now." But where that compound interest is, I can't say for sure.
The end result was that they spent several years in the wrong direction and left nothing behind.
This is the second layer of being deceived: believing that "patience" itself is a skill, and that persistence is victory.
no.
Patience is a virtue only when it is on the right track.
If you're going in the wrong direction, patience is a slow poison.
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The third layer: The real battleground for compound interest is not in the investment account.
Compound interest is real. It's just that most people are looking for it in the wrong place.
The real effectiveness of compound interest doesn't come from the investment market, but from your own abilities.
There is a fundamental difference between these two types of compound interest:
Ability will not be reduced to zero.
The market will crash. During the 2008 subprime mortgage crisis, the US stock market fell by nearly 60% in three months. In early 2020, global stock markets fell by 30% in one month.
Interest rates can change, policies can be adjusted, exchange rates can fluctuate, and black swan events can occur—every external variable can turn your account from a positive number to zero.
But what you've learned, no one can take away from you.
The pitfalls you've encountered won't disappear just because the market crashes; they've become part of your judgment.
The methods you've mastered in a particular field won't become ineffective just because the macro environment changes; they've been internalized into your framework.
The tuition fees that others are still paying today, you paid five years ago.
This isn't about yield; it's about a moat.
Moreover, the compounding of ability has a characteristic that the compounding of money lacks:
It can only withdraw money by itself.
You can make money in the market, and luck can help you too. When the market is good, everything goes up, and you can make money no matter what you buy.
But the money you earn through your own abilities is something only you can earn yourself.
Others can't use your judgment. Others can't use the methodology you've developed after making mistakes.
These things are assets that belong solely to you.
I have been working in the cross-border e-commerce industry for almost 10 years.
At the beginning, I didn't know how to structure my advertising account, I relied on intuition to select products, I guessed on pricing, and I didn't even know where the problem was when the A/B test went wrong.
I stumbled a lot during those years. One independent website project lost nearly 600,000 yuan.
But during those years, I also did one thing: every time I fell, I would carefully think about why I fell and how to get around it next time.
Now, AI can be used to automate the entire advertising process. Product selection has a proven screening framework, and ads have templates, logic, and a review mechanism.
I didn't learn this skill suddenly one day.
It was built up layer by layer over ten years.
Every tuition fee paid in the early days became a brick in a later judgment.
This is how compound interest works.
Some people might ask: Will the knowledge accumulated in cross-border trade become obsolete with the advent of AI?
This rebuttal deserves a serious response.
The specific operating methods will become outdated.
But the intuition to identify market opportunities, the ability to judge user needs, and the knowledge to know when to take risks and when to scale back—
These will never become outdated. Because they are essentially about understanding human nature and business logic, rather than about the operational skills of a particular tool.
The true compounding of ability lies in this understanding, not in the operational steps.
Now, let's look at it in perspective: Does what you're doing now generate compound interest?
Having said all that, let's get down to business.
Take the task that takes up the most time each day and answer these three questions:
1. Is it scarce?
Things without barriers to entry don't offer compound interest. Many people have learned AI tools in recent years, but the time it takes to learn how to use ChatGPT for writing and Midjourney for creating graphics is very short—in six months, everyone will know how, and your advantage will disappear.
Ask yourself: Could a smart person catch up with me in this area if they studied diligently for six months?
If the answer is "yes," then this is not your compound interest anchor.
Second: Is it indelible?
Market returns can drop to zero, but your judgment in a particular field cannot be erased by any external variable.
Ask yourself: If the industry changes drastically tomorrow, and I take what I've accumulated to another field, how much better will I be than a newcomer there?
If the answer is "not much stronger," then this is not accumulation, but depletion.
Third: Does it connect with your true desires?
Compound interest takes time, time requires persistence, and persistence requires you to really want to do it—not "I think I should," but "I would feel bad if I didn't do it."
Writing assigned essays, I sit there struggling, managing to write only 300 words in an hour. But when I write what I'm truly thinking, I can't stop; I'm writing until 3 AM and still not asleep.
Both states involve the same level of effort, but the output is on a completely different scale.
Finding that direction that makes you "unable to stop" is the gateway to compound interest.
All other conditions are secondary; this one is the fundamental one.
One last thing
There's nothing wrong with long-termism. There's nothing wrong with the concept of compound interest.
The mistake we made was using those two words to avoid a question we hadn't even thought through:
Where should I invest my time? Is there a real growth anchor point there?
Many people—including myself—use "long-termism" to disguise their lack of critical thinking with a respectable facade.
"I'm making long-term plans." "I'm accumulating experience gradually." "Time will tell."
Once these words are spoken, no one can refute them, and one feels at ease with oneself.
But time won't give you the answer. Time is just an amplifier—amplifying both the accumulation in the right direction and the sinking in the wrong direction.
Keynes was right: In the long run, we are all dead.
Time is your only non-renewable resource.
Compound interest only becomes real interest when it's invested in a real, existing anchor point.
Casting your hopes on "I believe it will get better" is called a long wait for death.
How long have we been fooled by the rhetoric of long-termism and compound interest? Let's discuss in the comments.
I believed it for at least 10 years.
If you also feel that someone around you is using "long-termism" to avoid thinking, share this with them.
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