Groundhog Day is a bizarre holiday. Despite the origins, our generation often thinks of Groundhog Day in reference to the 1993 movie by the same name. In this classic comedy, Bill Murray (aka Phil Connors) is covering the annual event in Punxsutawney, PA when the same day happens over and over. It always makes me laugh and got me thinking about the compound effect on your life when you do something every day. What would happen if you treated certain aspects of your life like Groundhog Day?
At a young age, my father gave me three pennies every morning. I jumped out of bed every day to collect those shiny coins. My stash grew considerably over time in my plump piggy bank savings. But, what if I invested them instead?
Let's imagine we invest a pair of dimes (Par-a-digms) into the market daily. 20 cents per day for 60 years is $4,000. Over that same time period, equity markets rose 10.2% turning your $4,000 investment into $300,000 today. That’s the power of compounding.
In the early years, it doesn’t seem like much. But at historical market returns, your money doubles every seven years. It’s exponential, so $300,000 will grow to $600,000, then $1.2 Million. All from a pair of dimes invested repeatedly every day.
However, compounding goes both ways...
Examples of positive compounding:
- Saving money
- Investing systematically
- Regular exercise
- Learning a new skill
- Healthy nutrition
- Acts of kindness
Examples of negative compounding:
- Credit card debt
- Not brushing your teeth
- Sleep deprivation
- Excessive social media use
- Eating ice cream every day
- Negative thoughts
Bill Murray's character starting doing small positive things every day that led to his mastery of the piano, ice sculpting, and French poetry.
Compounding is everywhere. Small actions lead to great outcomes over time and the cumulative effect of incremental action is incredibly powerful.
How will you put a little Groundhog Day into your life?
To living your ideal life,
The Paradigm Team
Paradigm Advisors is a fee-only financial planning firm based in Dallas, Texas and Fayetteville, Arkansas. Paradigm Advisors provides comprehensive financial planning and investment management services to help clients organize, grow and protect their wealth throughout life’s journey. Paradigm specializes in advising well-established career executives through financial planning and investment management. As a fee-only fiduciary and independent financial advisor, Paradigm never receives commission of any kind. Paradigm is legally bound by certification to provide unbiased and trustworthy financial advice.