‘Compound interest’ is defined as ‘interest on the initial principal plus on all of the accumulated interest from previous periods on your deposit’.

Compound interest works to grow your wealth over time. Similarly, compound learning works to grow your knowledge.
If the former is ‘interest-on-interest’, the latter is ‘knowledge-on-knowledge’.

The rate at which compound interest adds-up depends on the frequency of the ‘compounding periods’. The higher the frequency, the greater the compound interest – on the same principal, at the same time. 

So, if you invest $100 today, an annual compounded interest rate of 10% will deliver lower results than a semi-annual compound rate of 5% - over the same time period!

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Ok- so I guess you can figure out where this is heading in terms of how our kids learn:

1. Learning is not a sprint – it’s a marathon and it's about building your wealth of knowledge over time

2. Everything you (l)earn starts ‘working for you’ the moment you learn it. It is important to keep building upon it by deepening understanding of each subject and connecting a wider set of subjects like a polymath or T-Shaped learner. 

3. Learning is not just about taking in or memorizing information. In the context of effective learning, we mean someone is able to absorb, integrate, recall, connect, apply and improve upon what they have learned, over time. Compounding knowledge is central to this idea, since one keeps on growing their existing levels of knowledge as they add more layers of information, and are therefore able to make more connections. 

In effect, new knowledge benefits from the old. The more effectively you learn - understand, recall, connect, apply) the greater your wealth (of knowledge) and the stronger your returns (performance).

If you read a challenging book today that you read several years ago, chances are you will understand it better today. The reason is of course the effect of compound learning - the more you know, the better you will understand new things.

That's why, says Max Marchione in this great post about compound knowledge, that if two people read the same thing, the person with the larger (existing) knowledge base will learn more from the book.

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The Magic of Compound Learning

Albert Einstein apparently called compound interest the “eighth wonder of the world”, adding “He who understands it, earns it; he who doesn’t, pays it.”

The world of robotics and AI is using the idea of ‘compound learning’ to great results. This article by consulting firm Gartner explains the impact on machines. The compounding happens when the AI software learns from each interaction, and the algorithms improve over time. ‘Training’ the intelligent machines makes them increasingly capable of smarter decision making.

The question is, why aren't we giving our children the benefit of this magical concept, when we know that a compound learning approach can 10X the performance outcomes?

Because that's just not how the current system is set up. Right now, almost everyone is focused on the ‘what’ - the curriculum, the exams, the marks. It’s about gathering information but it assumes that our children will be able to understand, connect and use that information in the real world. 

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Learning in Silos is a Waste of Time in the 21st Century

No subject is unconnected. We've discussed the benefits of inter-disciplinary learning in this post, but it's important to accept that in the era of knowledge, information by itself has no value. We need to be able to connect information and apply it to do things with what we know. 

People who are able to think beyond the boundaries of their area of specialization will be able to make smarter decisions, simply because the world they live in is so connected. The problems they are solving for are impacted by so many variables even outside of their field. 

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As Charlie Munger says, a professor of poetry may know everything there is to know about poetry but they just won't be that wise in a worldly sense - in terms of good decision-making - because their breadth of knowledge is low. They are relatively disconnected from the realities of other fields that affect their world and therefore cannot bring those factors into the consideration set when making a decision.

No biologist, no doctor, no mathematician, not even a computer coder can be effective by being stuck to learning only in their field. 

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For us parents, its not about helping our kids learn a lot about everything. Its about helping them be really effective learners, so that they can learn things they need do, when they need to, without feeling like they are trying to take on the impossible. 

You may argue, for example, ‘why should a coder know anything but coding? She should be able to code anything she is asked two.”

Sure. If that is what she wants to do, its fine.

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However, there are two considerations.

1. She will soon lose out to other coders who have the ability to learn a bit about the world of the application they are coding for (eg. if they are asked to work on a medical app, learning  quickly and effectively about that world and its needs will help them design far superior code). 
2. She will always be ‘told what to code’, never coming up with the ideas herself. Without the ability for value-creation, she will remain a behind-the-scene coder (at least till the robots take over that job too). After the robots take over, she will find herself in a challenging (and redundant) place. 
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If your child wants to be the one coming up with the ideas for the coders (and anyone else) then they have to know how to compound their knowledge. 
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Without effective learning skills, they won’t.

On the other hand, the coders who have effective learning skills will:

• Be able to pick up the nuances and models governing the industry they are developing code for (maybe medical one day, travel the next, and pet care at another time)
• Apply these insights they learn into their existing coding language and develop new features or UX that creates value for the business
• Even if robots took over coding, this individual would already have demonstrated her ability to create value, and will likely upgrade her career to someone who can train AI and develop better business ideas and solutions.

The examples above show that at the core of compounded benefits of ‘knowledge-on-knowledge’, lies effective learning. 

Learning how to learn is a distinct set of skills that help students transform into effective learners.

By effective learning, I mean being able to understand, recall, integrate and connect, and apply knowledge. As our first coder in the example above will realize soon enough, we need to be equipped for a world where smarter human decision-making and connected problem-solving will be prized above all.

Effective learning is not about spending more time learning, but to get so much better at learning that knowledge compounds and performance outcomes multiply exponentially. 

Also read: The Effective Learner's Manifesto

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How Polymath Learners Leverage Compound Knowledge for 10X Performance

Elon Musk, Leonardo Da Vinci, Oprah Winfrey, Steve Jobs, Warren Buffett, and Bill Gates - all are polymaths. They are masters at using their effective learning skills to compound knowledge. This results in exponential performance and is why they are the game-changers they are.

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Polymaths leverage the concept of compound knowledge with these 4 building blocks:

1. Inter-disciplinary learning

The Ability to Learn from Multiple Disciplines‍

Polymaths are great at identifying and understanding the big ideas from major subjects as and when they need to. This helps them see things from multiple perspectives and lenses - something that deeply specialized people and generalists lack. 

Also called T-Shaped learning, interdisciplinary learning is not about being an expert in everything. It is about being able to build and use a wide-base of working knowledge across multiple fields, in addition to deep knowledge in one or two select fields. When needed, they can delve into new fields and make newer and more unique connections because of the compounding that will kick in.

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2. Value Creation

The ability to Connect Information to Create Unique Knowledge or ideas‍

There is no such thing as an isolated fact. No subjects exist in a silo. Finding the connections can create magic.

Polymaths are great at seeing problems in an entirely new and unique light by:

• Connecting new knowledge with their existing information 
• Connecting knowledge and ideas from different subjects and fields 

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This ability helps them devise unique solutions that neither specialists nor generalists can. 

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3. Knowledge Transfer

The Ability to Apply that Knowledge for Problem-solving and Innovation ‍

A lot of accumulated knowledge will make you an intellectual for sure, but in the real-world, it can be less-than-useful unless it can be harnessed. 

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Learning or knowledge transfer is the process of taking knowledge from one domain and applying it to another field. For example, architects draw on insights from nature and ecology to make naturally-cooled buildings, and marketers apply models from psychology and human nature into message design. 

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Polymaths are great at applying their unique connected knowledge in different contexts. This helps with smarter problem-solving and decision making.

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In fact, this entire post is about how compound interest - a financial model - can apply to effective learning, to exponentially improve learning outcomes for our children. We are thinking beyond the narrative of education and schoolroom teaching, and applying a device from another field (finance) to reframe the idea of effective learning for improved outcomes.

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4. Continuous Improvement

Always Getting Better at Learning‍

Polymaths are constantly focused on getting better at each of these elements of effective learning:

• Absorbing and understanding more information from multiple disciplines
• Recalling and Connecting the dots of new knowledge with existing knowledge
• Applying the knowledge to solve problems or innovate
• Improving their learning process using techniques such as Reflection and Feedback ‍

We see polymaths as genius game-changers, but really they are just super-effective learners who know how to use their knowledge optimally.

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How Do I Connect this Back to My Child’s Learning?

In the context of helping our children be more effective learners, we need to build a combination of learning skills and learning techniques that work for them. In fact, if I had to put this into a formula, Game changing learning strategy= Effective Learning (Skills + Techniques + Styles + Growth Mindset) X (time+effort). The only difference is every learner puts in their own values for these variables. 

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To help your child leverage the benefits of compound learning, start with thinking about what learning skills and techniques will help them become effective learners. 

Start with these made-for-parents reading suggestions:

• Effective learning skills such as inter-disciplinary learning, goal-setting; time, resource and energy management, reflection, feedback, practice, and many more that I have discussed in detail in this guide.
  
• Effective learning techniques ranging from testing & evaluation, project-based learning, elaborative interrogation, teaching to learn and several others, 19 of which I’ve listed in this post about how to learn anything effectively - learning techniques for students. 
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The right learning mindset, also called a growth mindset in the learning context is important for learners to own their learning. I’ve discussed multiple aspects of the Growth Mindset in this highly-detailed guide on growth mindset for parents of effective learners. 

Bonus read: Get the ALL-IN Effective Learning Formula Poster here