A mental model is a way to think about the world. When faced with any key decision, you effectively choose one of two potential characters. An investment compounds with a positive rate of return into the future. The power of this framing comes from understanding the role of compounding and the impact it has on our envisioned future self.
A mental model is a way to think about the world. It is a tool—a lens through which you can simplify, evaluate, and make decisions in real time as you walk through life.
When faced with any key decision, you effectively choose one of two potential characters: Investor or Borrower. The Investor is a long-term thinker who makes an investment to delay gratification, while the Borrower is a short-term thinker who takes out a loan to experience pleasure now.
Investments compound positively and the future self cashes in on the rewards. Loans accrue interest negatively and the future self is stuck with the bill.