The Aggregation of Marginal Gains


If you grew up in Britain in the 80s, you’d know that back then cycling about as about as popular as leprosy amongst the general public.

Cycling was for kids, the French and people that could not afford a car.

Back then, the idea of a British team winning the Tour de France or dominating Olympic cycling seemed about as likely as Scotland winning the football World Cup.

This underlines what an amazing achievement it was that Great Britain won the most cycling medals  at the 2008 and 2012 Olympics and that the British-based Sky team won the Tour de France in 2012 and 2013.

How was this possible? Why not ask Dave Brailsford, the manager that led first Team GB and then Sky Cycling?  When asked to explain his secret Dave Brailsford described his approach as The Aggregation of Marginal Gains.  Check out this interview with him where he explains this.

Its hard to convey the power of The Aggregation of Marginal Gains via media soundbites.  Journalists often asked Brailsford about the example of using the riders own pillow from home when staying in a hotel during a race to sleep better and gain an edge.  The implication was:  Pull the other one, Dave. I mean really…how is that supposed to win you a gold medal?

The answer of course is that on its own it won’t. The magic is in the aggregation of many such gains.

Can you see the analogy with financial independence here?   For years I failed to fully join the dots between frugality tips (the pillow) and financial independence (winning the Tour de France).  To me, frugality tips always sounded a bit lame.  Most seemed trivially small.  I used to wonder why people that brought in their own lunch into work in those Tupperware containers even bothered.  I couldn’t see how this could lead to financial independence.

This may be why many of us instinctively recoil at frugality tips. If The Escape Artist were to wag his pointy finger and bossily tell you to save money on your central heating bill by turning down your thermostat by 1C, you might reply saying something like:

What is this frugality nonsense that The Escape Artist is spouting?  Just by turning down the thermostat I will not save enough to retire! Screw him and his preachy frugality!

Does he not realise I am a successful middle class adult? Am I not Vice-President of Strategic Change Management and Biscuit Procurement at Mega-Corp?  These frugality tips are not befitting of my status…in fact, I’m going to take my jumper off, walk around the house in my Speedos, open some windows and turn up the central heating…because I’m worth it!

I can understand that reaction and even have some sympathy with it. I don’t like being told what to do either. Its also true that, on its own, turning down the thermostat is not going to get you to FI.  But it will save you money.  It is a single step on a long journey.

Its not about the thermostat.   Its about changing your entire operating system to unleash the aggregation of marginal gains. Every day we face hundreds of decisions.  Because thinking about all these would slow us down too much, we follow habits using crude short cuts based on the following: What is the quickest or easiest way? What is the most convenient? What seems most comfortable?

If we want to get to FI, we need to replace that default setting with a new operating system that is based on: what is optimal given my FI objective? is this spending really necessary?, how can I use my creativity instead of paying money to solve problems? what will challenge and strengthen me?

Initially the benefits accumulate in a linear way…so if you turn down the thermostat, your spending falls and your net worth grows by say £1 a day. But then as you aggregate multiple gains over time, something amazing starts to happen.  The benefits stop growing linearly like this: 1…2…3…4…5…6…7. and they start to grow exponentially like this: 1…2…4…8…16…32…64…

Here’s how the aggregation of marginal gains works:

1. If you do not start, you will not finish

If you decide at the outset that the task is too big then you may never start.  A ladder does not climb itself…we all have to start at the bottom and work up.  Its not particularly hard to get to the top of a ladder…left foot, right foot etc….unless you don’t start climbing, in which case it is fucking impossible.

You can start by focussing on getting your income up or your expenses down. Better still, combine both.  It doesn’t matter exactly where you start…what matters is whether you start.

2. Repeat after me…repetition works

Much of what we do repeats every day.  So we choose a temperature setting for the central heating and then leave it there…every day.  You only have to turn it down once and you are then saving money on every day of winter.

If you drive a car every day, replacing your SUV with a more fuel efficient car will save you money every day. Look for decisions whose consequences repeat day after day, week after week, year after year. Changing these has a huge multiplier effect.

3. Accumulation

Imagine you are spending a fortune on cars.  You can slash depreciation costs by buying used cars rather than new. You can stop buying SUV clownmobiles and get a small car.  You could pay cash rather than borrow using consumer finance.  You can haggle when buying.  You get top dollar auctioning your old car on the internet.  You choose a diesel car that does 50+ mpg. You pump up the tyres to get maximum fuel efficiency. You take those golf bats out of the boot. You optimise your mpg by hyper-miling.  Oh and you remember that you have legs.

You have now accumulated a set of car habits that embed frugality and are consistent with your goal of FI.

4. Compounding

If you save £100 when you are 21 and invest it so it compounds at 10% per year, when you are 50 it will be worth £1,586. You can’t do these sums in your head because on the African savannah our ancestors spent their time hunting and showing off to potential mates rather than retirement planning.

The formula for this is FV = PV *(1+r)^n where FV = future value, PV = present value, r = interest rate and n = number of years invested.

Compounding matters. Its why people with wealth managers are often pissing away a million pounds or more.  If you can afford to piss away £1m for bad advice, that’s fine. I can’t.

5. Creativity

Think of yourself as CEO of your own business. Cutting costs is great but you cant ignore revenue.  The path to FI is not just about spending less. Its also about creating new sources of value, new skills, new ideas and new sources of income.

Some ideas help you reduce spending, other ideas boost your income by monetising skills you have or creating micro-businesses. Because interest rates are so low, even small alternative income streams are more valuable than you might think. If you have a baby business that delivers you £2,000 every year, you would need a cash balance of £200,000 to replace that income at a 1% interest rate.

6. Spin-off benefits

At the risk of sounding like a crazy Zen Buddist, everything in life is connected. Improvements lead to positive benefits in apparently unrelated parts of your life.

So you might cut down on doughnuts to save money but end up losing weight and looking better. This might get you better promotions / pay rises at work that earn you more money.  As a result you might become more optimistic. As a result, people might enjoy being around you more, so you do better at work…and so it goes on.

These spin-off benefits are impossible to predict in advance. But they are real and they will come.

If you look at a graph of exponential growth it looks like nothing much happens for the first few years.  This is why saving initially feels boring.  But the early years have to be gone through.  The future always arrives and compounding always works its magic.

As the slope of the curve starts to pick up, you start to get some validation that the strategy is working.  By the time you have overcome your initial scepticism, the graph has pointed skywards and it is hard to keep up with how quickly your net worth and knowledge are growing. Its not been easy for me to realise this myself….let alone to convey to others how this feels to live through.

But here is the best analogy I’ve been able to come up with so far. The path to FI is like the progress of a space rocket.

Imagine your net worth as the rocket. Before you can earn anything you have to learn, finish school and get a job.  In the same way, there are hundreds of actions and decisions to be taken just to build the rocket and get it to the landing site…even before launch.

rocket launch

It then takes a huge amount of energy and effort to raise the rocket even an inch off the ground.

We have to spend less than we earn and that does not come easily. There are huge forces of gravity, mass and inertia that need to be overcome even to get the rocket to the height of a tree.

But once the rocket achieves lift off, it starts to accelerate faster and faster. As it gains altitude, the air gets thinner, the resistance decreases and the rocket gains ever more momentum.

Eventually the rocket escapes the atmosphere and Earth’s gravitational pull – effortlessly cruising in space at incredible speeds with no further effort required.

This is your Financial Independence moment.


The Aggregation of Marginal Gains : See Part 2 here


  1. Fuck yeah!

    Pretty much how I used to think. I’m earning decent money, why not buy a sandwich and coffee for lunch.

    But it’s all about the aggregation of these smaller amounts. And changing your habits so that you are operating on autopilot rather than making concious decisions and feeling like a martyr all the time.

    And as it’s never going to be as good as this *deletes have drafted marginal gains post*

    Mr Z

    1. Thanks! I didn’t quite understand the last line in your comment but, other than that, I think we can safely say we are in agreement Mr Z.

      1. Hey TEA… I think he just meant he was already half way through writing a similar post but it was never going to turn out as good as your one, so he’s deleted it!

        Anyway great post as usual 🙂

        It’s such a simple concept yet one that many can’t get their head around. If I shave 1-2% off my spending in 10 different areas that starts to add up pretty quickly, and those £2-3 per month savings add up for much more over a year and then 10 years.

  2. Great post, it really does pull together a bigger picture for why each if those smaller money saving tips matters.

    When I talk to people about saving money you can tell that they often can’t join the dots between one example and how it could be repeated (along with others) to make a huge difference. Maybe I need to show them your post!

    I have found what you are saying to be very true in my own life, and am still finding it to be even more so as we continue to earn and invest more and make our spending more efficient. The speed we are building up means that gravity is finding it much harder to slow us down. It’s a great feeling!

    1. Of course you should show them my post!

  3. Great timing on this! I’ve hit a few financial potholes recently and my motivation has been sagging as a result. My efforts seem to produce no results even though intellectually I know they’re adding to the momentum of the rocket (nice analogy) and every day I get closer to my goal; it just doesn’t *feel* like it.

    Fortunately my relatively frugal habits are fairly, well, habitual, so I keep doing them anyway, but emotionally it’s a bit rocky, so good to be reminded that every little helps.

    The reminder on the value of even a small side cash flow is extremely timely; while it may not be a long-term option I have got a promising short-term side hustle in my eye which could return a couple of thousand a year and this might help me feel the value of that better. (If it’s not long-term viable I guess it’s not strictly correct to compare it with the return on an invested lump sum, but I think I’ll try to ignore that for the emotional filip. 🙂 And it might work long-term anyway, you never know.)


  4. Brilliant! Indeed I had an argument recently on why reducing expenses matter as much as increasing income and combining both will see you reach your goal quicker. Seems obvious but a lot of people cringe at what they see as penny pinching. Done sensibly, after a while, it becomes second nature.

  5. I really enjoyed this post. Whilst not at “lift off” stage yet (and in truth as a downshifter it’s not my only goal) I can certainly feel the benefits of a lot of small changes Mrs LCIL & I have made over the years: our net worth just creeps up regardless of what we spend month.

  6. Sundeep · · Reply

    Thanks for the introduction to the concept of “Aggregation of marginal gains” and your write up of concept. Also liked the rocket analogy at the end. Currently I’m on the launch pad perhaps even starting the launch, waiting for weather to clear up before taking off (i.e. seeing where this market is heading [I know I should just invest full steam ahead, but its something I’m working through nibbling here and there when things go on a good sale])

    We all know the little things do add up, but sometimes it’s hard to see it, as you stated, it takes years for those small changes to manifest themselves into something measurable.

    Nice little pick me up to keep me plugging away.

    1. Talking of pick me ups Sundeep – check out the snazzy video clip I’ve just embedded into the article.

      On the subject of market timing, Warren Buffett’s latest letter to shareholders is worth a read.

  7. Great story about the GB team! Thanks for reminding me that instead of getting a few extra minutes in bed each morning, I get up so that I have time to make my lunch for work and it’s worth it in the end as it all adds up. I very rarely spend any money during the week – I dread to think what I was spending when I couldn’t be bothered (and was too lazy) to bring my own lunch in.

    1. Thanks, I didn’t do the DIY lunch thing…I wish I had though…would have been out of the Camp sooner!

  8. Some uncommon (or at least, uncommonly known) wisdom here; many thanks. I’ve certainly seen the benefits of the “sweat the small stuff” approach in my own life and in others (and also the astonishing effects of failure to do so!).

    May I offer a couple of tiny thoughts in exchange for this great piece ? First, always worth remembering that an extra $1 saved is worth considerably more than an extra $1 earned, as the former comes tax-free – and there ain’t much of that around these days.

    Second, it’s actually pretty easy to do compounding calculations in your head, via a simple rule: any amount of money compounding at X per cent per annum doubles every 69/X years.

    So, in the example you give, 10 per cent p.a. will produce a doubling every 6.9 years – call it 7 years. As there are 29 years between 21 and 50, in that time you’ll get 29/7 ~ 4 doublings, i.e. 16-fold increase….so $100 turns into roughly $1600.

    But the real benefit of sweating the small stuff comes from your Rule 2: “repetition”. That really turbo-charges the compounding effect, as you’re repeatedly adding $100 to the amount being compounded. This has a staggering effect on the final sum…increasing it from $1600 to something close to $16,000 over the timespan you use – an amazing 10-fold increase.

    At a more realistic 3% pa rate of return after inflation and fees, and (say) $100 saved a month, that leads to approximately $50,000.

    Such is the power of “compounding + persistence” !

    1. Yes, you certainly may. You are absolutely right that this stuff is easy but not commonly known.

      I think its reasonable to expect better than 3% real returns….see this post for explanation.

  9. Thanks v much for the link to the earlier post on SWRs etc – very cheering for those of us who started late to this game.

    Messing around with the maths of “compounding + persistence”, I came up with another quick rule of thumb to make the sums easier for those who can’t be bothered to do a spreadsheet etc:

    If your one-off sum, compounding at an average of P % over a given period, grows N times larger, then salting away the same sum every year for the same amount of time, grows by a factor of (N – 1) x (1 + 100/P).

    So, in the example you give, your one-off sum of $100 grew to $1600, a factor of 16x. So if you’d salted away that $100 _every_ year for the same amount of time, you’d end up with a sum that was (16 – 1) x (1 + 100/10) = 15 x 11 = 165x larger.

    Thanks again !

  10. haha – you’ve turned into MMM – good work..

    penny-wise pound foolish is definitely significantly more important than marginal gains as per paretos rule mentioned above – sweat the big stuff first

    marginal financial gains are good as long as they don’t also incur marginal negative impacts. so its very personal and as such you have to figure out what works for you, be careful as you can become very little fun if you get it wrong

    perversely, in endurance sport, one marginal gain is often all you need due to the way performance falls off a cliff at the lactate threshold. have you heard of the term ‘sandbagging’ which refers to how you deploy marginal gains over time to try and maintain competitive advantage for as long as possible? i.e. don’t blow all your best cards in one hand.. that brailsford is definitely a clever fella

  11. […] little thing. Check out The Escape Artist’s awesome article about Dave Brailsford and the Aggregation of Marginal Gains if you don’t believe me. But of course you know that, cos you’ve already read it, […]

  12. […] there you have it, small habits do really add up quickly into larger benefits, it is the aggregation of marginal gains in […]

  13. Absolutely great post!

  14. Patty · · Reply

    The tellers used to laugh at me when I went on Saturdays (this was the 80’s) and deposited my .19 cents or .27 cents or whatever I could scrape up. It was the repetition of making a weekly run to the bank that got me started savings. My logic at the time was this, “Okay, Patty, if you can’t save the small amounts what makes you think you’re ever going to be able to save the large amounts???” Duh, that’s what’s wrong with most ‘Muricans. We think it’s futile to save the small bits. They were still laughing when a few months later it was a $1.39 deposit, etc., etc. Until now they are asking me how I am able to put such large chunks into savings. Like anything else in life one must start where they are. We aren’t all going to win Publisher’s Clearing House and be able to put back the one large chunk that’s going to get us to FI. Some of us will need starting where we are with the odd bits and bobs and then practice it religiously, then you’ll be able later to do the larger bits as you progress. Not everything is done in flying leaps. Some of us can only skip to get started, but that’s okay. That’s how we learn. Marginal gains.

    Go. You can do it!

  15. thedoffer · · Reply

    Great post. I am currently in the internal argument phase of ‘concentrate on the big things vs the aggregation of marginal gains’. I think this article has just convinced me that I still need to focus on both. I’m new to FI and have started going through each one of your posts from the very start. Great site!

  16. This is a great link between sports and investing/FI. Interesting to change the perspective on the smaller things that will add up over time, have to take note and evaluate things!

  17. […] Aggregation of Marginal Gains” interviewed Alan Donegan and The Escape Artist who also had a blog post with this title. The Escape Artist talks a lot about the British cycling team coach Dave Brailsford […]

  18. […] is a powerful concept in life called the Aggregation of Marginal Gains, where we learn just how powerful small 1% gains are vastly underestimated when stacked and […]

  19. Good stuff. The concept of slow growth makes most people jump out of their paths and just continue doing what everyone else does – keep running on the rat wheel.

  20. […] Lest you think this is a fruitless activity in frugality, the please consider the importance of the aggregation of marginal gains. Every time I sell something online I’m forced to consider just how much utility I did/did […]

  21. […] none of these actions is likely to help you realise your dream in isolation. But thanks to the aggregation of marginal gains, the effect of several changes could be greater than you […]

  22. […] might not think these changes make much difference, but thanks to aggregation of marginal gains, putting all of the above secrets into practice could be difference between having your current […]

  23. […] in the end which might not sound like much but it’s the sort of calculating penny pinching that can make you richer over the long term. That’s savvy in my book. When it comes to life in perpetual debt, what’s the difference between […]

  24. […] not very much time spent on some of these activities, but I think it’s one of those “aggregation of marginal gains” […]

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