What is compound interest?
In the money and finance world compound interest occurs when you reinvest the interest earned off an initial principle / investment. Then your principle plus the interest earns more interest which you can reinvest to earn more interest which you can reinvest to earn more interest and so on… The ‘ole logarithmic millionaire maker..
However, we can see the effects of compound interest in our lives in many other areas as well.
Let’s take exercise for example. Let’s say you pick up running as a hobby. You go from running zero times a week to running two miles three times a week. At first, the exercise is miserable and you’re grumpy and dang wouldn’t it be nice to get back inside and turn on Netflix and finish season two of Outlander.. Alas, you persist and after a month you start noticing you have more energy at work, you are sleeping better, and you’ve lost 5 lbs. Woah that’s cool. In month two it’s easier to get up and run then when you started. In month three you’re feeling real good and have come to enjoy running. You’re in better shape which makes running easier and now you can run faster and longer. The effect of running has compounded in your life and the longer you do it the more benefits you achieve.
Now let’s talk about your music career and the easiest way to blow up any potential of compound interest.
1) Quitting Too Early
So many things to quit. So many ways to blow it all up and kill the potential of compound interest. Here are a few example:
2) Making Bad Investments
Homework for the people who care:
Try writing down three ways you can utilize the effects of compound interest in your music career. This could be really investing in your relationship with a co-writer, choosing 10 cities to really really focus on and play shows in until you can fill 100+ rooms, reinvesting your earnings from one release into the marketing of the next released and so on…
Founder of @lostharbormusic