The first familiarity with the term "Compounding" for most have been through the chapter in the maths book titled "Compound Interest".
$A = P(1 + \frac{r}{n})^{nt}$
While I might have solved tens of problems on the same, it did not make sense to me until very recently I started taking charge of my finances. Every individual who might have in some form invested their money, might be going bonkers over this term. To explain simply, the compound effect is the strategy of reaping huge rewards from small, seemingly insignificant actions. Hence, small investments when done consistently over a long period of time are expected to yield significant results.
However, as pointed out by Darren Handy in his book The Compound Effect, "The compound effect is the operating system that has been running your life whether you know it or not". Our system has been operating on the same principle ever since, just that we tend to call out this term only around finances. So after all, the maths we studied was not that waste!
The same analogy applies to personal growth as well, our very own asset. What seems like far fetched tomorrow, tends to become cakewalk the next week through baby steps taken everyday.
— Peter Drucker
So grab your calculators and do the math. If you can get 5% wiser and better every year, then you will be about twice as wise in less than 15 years. In less than 30 years, your return will be 4x. While this seems fascinating when you think about it, yet the human mind conspires against it. A simple analogy would be while we know investing is good, not everyone does it. Hence, only what you appreciate, appreciates. Battle the mind and track your baby steps to make the compounding work.
— Richard Hamming