It really takes time in making or shaping something future. Our kids are real example in front of us. And, kids really do enjoy the Domino Effect videos. If you are unaware, and still linking it to pizza chain, don’t worry you will learn and see a really amusing thing ahead in this article. And, for those who know about it, here is an important lesson on domino effect investments per se.
You know the battle of Mahabharata took place and results came in 18 days. But the dominos that built this fierce war took 45 years. Right from the Bhishma’s wow to, Pandava’s losing in gambling to Lakshgraha and finally the Geeta Updesha’s. The small events combined to a disrupting final event. Similar dominoes are toppling nowadays when US is in conflict with N Korea.
See some interesting pictures & a video of long term wealth creation using Domino Effect in this article. But let’s go step by step.
What is Domino Effect?
Dominos in simple life can be seen when kids play with cards. The image above is the simplest example of Domino Effect. One block leads to a fall of entire arrangement. I am sure you have done it with playing cards when you a were a kid.
But when you make the arrangements sophisticated the reaction may cause a huge event in the end. Each falling domino will produce an energy which when combined can accomplish huge tasks.
On 13 November in Netherlands, an experiment was conducted where 4491863 (approx. 45 lakhs) dominos were placed and coordinated as domino effect fall. This experiment produced energy which is produced when an average sized male does 545 pushups!!!
But the Dominos were still the same size.
So in further studies it was found that if you increase the size of each domino by 50%, the Domino Effect still works.
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This means you can start with a small and end up toppling larger things. This is wonderfully explained in the book The One Thing.
It says that, if you start with a 2 inch domino continue to increase the size by 50% and continue the experiment:
18th domino will topple the Leaning Tower of Pisa
23rd will move the Eiffel Tower
31st will reach Mt Everest and 57th will shake hands with Moon!
(Source Book The One Thing by Gary W. Keller and Jay Papasan)
Domino Effect in Real Life
Domino is an event and when they occur at regular intervals they may create something big. This can be positive and negative kind of chain reaction both.
Achieving moon is really a fantasy, but this tells you what you can do with small efforts. And, this learning can be imbibed in real life and especially how we invest.
The company Prudential did this live event experiment and called spectators to show them the Goal like Retirement can be achieved by starting small and then increasing it periodically.
Look at this video made by Prudential using Dominoes: (Duration 1.01 Min)
Domino Effect Investments
If you have an SIP, knowingly or unknowingly you are following the Domino effect principal. You have started with a small amount and will reach your goal. You may increase the investments (increasing the dominos size) by using Top-Up facility of the SIPs.
Domino effect tells us one more thing, which is behavioral. And this thing is Patience.
In investments you can achieve the unachievable by starting small and doing this small thing repeatedly and waiting for right time.
Now you saw the above picture from “The One Thing “how using 57 dominoes and starting with a 2 inch domino, you can reach moon. Look at some more pictures below and compare:
Warren Buffet’s Wealth Growth
S&P 500 Index
Franklin India Bluechip Fund
So how can you work with Domino Experiment in your Investment Life?
There are four keys to make domino effect investments in real life.
- Start with the goal you are most motivated to achieve (and this is not tax planning). Value the goal and break it into small parts .Start with a small contribution and do it consistently. It does not matter which domino falls first, as long as one start the chain reaction.
- Maintain momentum and immediately move to the next goals you are motivated to finish. In life you have to set more than one domino experiments as you have different goals. You can monitor them using your financial plan. With each new repetition, you will become more committed.
- When in doubt, look back at your calculations. Focus on keeping them simple, and manageable. The Domino Effect is about progress, not results. Simply maintain the momentum. Let the process repeat as one domino automatically knocks down the next.
- Soon your patience will yield. You will see huge dominos falling during end years. This is the time you are really making huge money. Maintaining it and not falling in traps is another key to save this wealth for your goals.
Hope you liked my article on simple domino effect investments.
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