My Mountain's too steep! – Part 2
My Mountain’s too steep! – Part 2
In my last post we started answering the question about what to do if your ‘mountain’ is too steep – that is, your Number just seems way too large: we started with the natural reaction, which is to try and knock some off the top …
… but, if you’ve ever tried to make a mountain into a molehill, you can see how tough that can really be.
But, there’s a MUCH easier way!
When you realize that it’s not the size of the mountain that’s important (unless, of course, you’re talking about climbing Everest and you are worried about snow, ice and rarefied air!) but the steepness of the climb then you have made a major breakthrough in your thinking.
Ever seen a mountain way off in the distance?
It looks low … but it may not be, it may be real high. Intuitively, you realize that if the road that you are on would just gradually climb all the way until you get there, you would be at the top of that huge mountain and barely even realize it.
A long distance between you and the mountain means a shallow climb (just – and, this is the key – spread over that long distance) so, it’s not so hard to climb at all …
In the real world, though, mountains don’t come with nice, long, flat roads to the top … they look more like the mountain in the picture above.
But, the same principle applies: whether you stand at the first marker (on the left) or the second marker (in the middle) makes a BIG difference as to whether you’ll make it to the third marker (on the right) at the top!
The difference is the ‘run up’ that you get … building up the steam and momentum that helps to carry you all the way to the top: it’s how a cyclist gets up a steep hill … so, it’s actually easier to get up if you just start a little further away, where the road is a little less steep.
In the world of money, the ‘momentum’ that we build up comes from the power of compounding; just take a look at how $1,000 compounds over 30 years (@ 10% p.a.represented by the blue part of the graph, below) … more importantly, look at what happens if we start just 10 years later (represented by the red part of the graph):
… we can get to the same end point, but only by increasing our annual compound growth rate by a hefty 55% (i.e. to 15.5% p.a.).
Increasing our compound growth rate implies increasing our risk e.g. moving from cash to investing in stocks; or, moving from stocks to investing in real-estate; or, moving from investing in real-estate to buying a business; or, moving from buying a business to starting our own.
So, if you want to give yourself the maximum chance to reach the Number that you need to live your Life’s Purpose, by all means look at what you can trim back (without compromising your true needs) …
… but, more importantly, give yourself just a little more time to get there:
Extend your Date!
That’s it: the all-too-simple ’secret’ to financial success revealed at last 
Thanks to Michael Gerber and the E-Myth: 
Good post. What I learned from this post and using the Annual Effective Rate calculator: http://www.investopedia.com/calculator/AnnualEffectiveRate.aspx
is that if I keep up my focus, work and investing for another 5 years past my 10 year date, I can drop my required compound growth rate by 3%(from 40% down to 37%), however, quadruple my number accomplished from 4 million to 16 million, and i’ll still be in my 40’s.
Incredible what taking a little more time can do for you!