The 1% Rule

The 1% Rule, as described by James Clear in his book Atomic Habits, is the idea that small, consistent improvements compound over time to create remarkable results.

The core concept is this:

• A tiny improvement, or a 1% gain, each day for one year results in a 37 times improvement. This is because your progress doesn't just add up, it multiplies. The formula for this is $1.01^{365}\approx 37.78$.

• Conversely, a 1% decline each day for one year will bring you down to nearly zero. The formula for this is $0.99^{365}\approx 0.03$.

Clear uses this rule to emphasize the power of habits and the importance of focusing on systems rather than just goals. A single 1% improvement is often unnoticeable on its own, but when you repeat it day after day, week after week, and year after year, the results are massive.

The key takeaways from the 1% Rule are:

• Habits are the compound interest of self-improvement. Just as small amounts of money can grow significantly over time with compounding interest, small habits can lead to exponential growth in your life.

  
  

• Forget about setting goals and focus on your system. Instead of fixating on a specific outcome (e.g., losing 20 pounds), concentrate on the process that will get you there (e.g., eating one more vegetable with each meal).

• Small choices matter. The tiny, daily decisions you make—whether to read a page of a book or scroll through social media—add up to determine who you become and what you achieve.

Happy Investing! 😉