Why 10% Creates an Infinite Difference

For most of my adult life, I’ve been a little overweight. Not a ton, but enough.

Most of my friends are nice about it (“What do you mean?! You’re in shape!”), but I notice it. The scale notices too.

But I’ve felt a newfound determination to be healthier over the past few months, no doubt triggered by the birth of my second daughter.

As I thought about it this past weekend, a tidy bit of math popped into my head.

Depending on many factors, adults require between 2,000 and 3,000 calories per day. Let’s use a round number: 2,500 calories. We’ll say that 2,500 calories per day allows us to maintain a stable weight.

We also know that a pound of body fat is estimated to contain 3,500 calories.

Hypothetically (…or, based on experience), if I ate 5% too many calories for a full month, that would equal an extra 3,750 calories (5% = 125 extra calories per day…multiplied by 30 days). That’s almost exactly one pound of body fat.

And if I ate 5% too few calories for a full month, I would lose almost exactly one pound of body fat.

Let’s magnify that small 10% swing – from 5% too much to 5% too little – over months and years. It compounds massively. Just one little pound per month…but for years and years! It creates an infinite difference in health outcomes – from morbidly obese to lean and healthy. Just a small 10% swing.

And that small 10% swing is equally impactful for long-term investors.

Let’s start with the investor who spends 100% of their money and saves 0%. We all know this outcome. No matter how much time goes by, they’ll have nothing saved. Easy math.

Now let’s look at the investor who spends 90% of their money, saving 10% of it (and letting it compound for decades). Even after adjusting for inflation, one could easily conclude that this investor will have compounded their annual salary by ~15x over a 40-year career.

(In other words…someone earning $100,000 and saving $10,000 per year could easily build a $1.5M portfolio over 40 years – and that’s after all inflation is fully accounted for!)

The 10% difference in the savings rate is the difference between saving nothing and saving 15x your salary. That’s an infinite difference.

We shouldn’t underestimate the power of small differences, compounded over decades.

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