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The Little Things We Do Really Matter

It’s the little things you begin with that matter most! The wisdom found in the Tao Te Ching says the long thousand- mile journey begins under one’s feet by taking small steps! If you are hiking and climbing a mountain you take one little step at a time. It is unrealistic to think you can physically run to the top.


Getting into the habit of making small steps can create big financial opportunities. Develop little habits you can begin to incorporate into your daily life without noticing a big change. For example, If you save a $100 a month for one year at 5% your money will grow to about $1,200 after one year but if you do it for 10 years you will have over $15,000! That’s starting to save a little over $3.00 a day, the price of a cup of Starbucks coffee.


Just as with money, even in sports, little changes can make a monumental difference. Here is an excellent example from James Clear’s book Atomic Habits:


“Since 1908, British riders had won just a single gold medal at the Olympic Games, and they had fared even worse in cycling’s biggest race, the Tour de France. In 110 years, no British cyclist had ever won the event. In fact, the performance of British riders had been so underwhelming that one of the top bike manufacturers in Europe refused to sell bikes to the team because they were afraid that it would hurt sales if other professionals saw the Brits using their gear.”


David Brailsford was hired to change all of this. He decided to make tiny, minor changes to the process of riding the bike. Some of them included riders wearing electrically heated shorts to maintain muscle temperature, redesigned bike seats to make them more comfortable, testing varying fabrics in wind tunnels to improve aerodynamics, and even encouraging riders to wash their hands more often to avoid germs that may cause them to become ill.

“Just five years after Brailsford took over, the British Cycling team dominated the road and track cycling events at the 2008 Olympic Games in Beijing, where they won an astounding 60 percent of the gold medals available. Four years later, when the Olympic Games came to London, the Brits raised the bar as they set nine Olympic records and seven world records.”


We need to make good habits work in a small way each day even in our family dynamics. As a child, my younger daughter Kim would snatch the change that fell out of my pant’s pockets each night and stockpile it in an over-sized piggy bank. She saved a little bit at a time, sometimes only pennies a day, and when we took a family trip to Italy she amassed a considerable amount of money and parlayed it into some nice Italian gifts. I mentioned I was proud of the way she saved and she said, “See, daddy, you taught me well. Little things really do matter!”


James Clear states it in his book “Habits are the compound interest of self-improvement.” This is a very difficult thing to do. He points out that “If you save a little money now, you’re still not a millionaire. If you go to the gym three days in a row, you’re still out of shape. If you study Mandarin for an hour tonight, you still haven’t learned the language. We make a few changes, but the results never seem to come quickly and so we slide back into our previous routines.” The slow transformation makes bad habits more frequent and sends us down a slippery path. Conversely, make small, tiny tweaks in our daily lives for the better, and slowly incorporating positive change, can have profound impacts over time.


Compound interest is the eighth wonder of the world.

"He who understands it, earns it ... he who doesn't ... pays it."  Albert Einstein

As we relate small, incremental growth to finance, we are met with compounding interest. The power of compounding interest is awesome because the more money you have the more it will grow exponentially! Like chopping wood, initially, the impact of the ax blade striking the wood is not very noticeable. But after chopping consistently in the same spot the wood begins to splinter. Similarly, financial habits are a mindset. The more opportunities you seize to save a few dollars the more wealth you will have.

The small steps we engage in don’t only materialize with more money. They can have major impacts on our life and careers as well. Consider maxing out your contribution to your company’s 401k plan, which would mean saving $19,000/year into the plan. If these contributions were not invested, you would have amassed $760,000 over the course of 40 years, a sizeable sum. But, investing those contributions, assuming the portfolio grows at 8% over the next 40 years, your 401(k) could be worth approximately $4.9 million! This is an example of what Albert Einstein called “compounding interest.”


How do people become successful investors? Why are some people able to save more successfully than others?

Successful investors look at every opportunity as a win-win for everyone. When you think of the success of a Bill Gates from Microsoft and others like him, they have created platforms that enabled everyone to benefit. People who became successful began trying new products and things in a small way with the intention to make minor improvements to something they were already doing! You don’t have to reinvent the wheel to be successful. You already have the capacity to do little things each day to take it to the next level.

The Dimensional Fund Advisors Story

We have embraced the investment philosophy of Dimensional Fund Advisors at Arcadia Wealth Management. Their academic approach to investment selection has been beneficial in our practice as financial planners. Similarly, their story is very compelling when applied to doing little things that make a big difference.


The stock market in the early 1980s was emerging from an era of stock-picking to one of more diversified mutual funds. It was at this time that two innovative University of Chicago professors, David Booth and Rex Sinquefield started a mutual fund investing exclusively in small companies. Working out of a two-bedroom apartment in Brooklyn Heights, New York, this concept morphed into a multibillion-dollar investment firm that includes academic who won the Nobel Prize in finance and economics.


On a recent visit to the DFA campus, I had the opportunity to speak to one of their portfolio managers. I asked him what criteria he utilizes to pick stocks. He said that at Dimensional Funds they get into the habit of regularly reviewing checklists for buying stocks at the right prices. He continued by saying that many small decisions go into the process of investments that make a big difference over the long run.

Today DFA has over $517 billion (USD) in firmwide assets under management as of December 31, 2018, and is the 7th largest mutual fund company in the US. We embrace the same process at our company Arcadia Wealth Management with the funds you so generously entrust with us. We attribute our success to the good habits and the small things we do each day in our fiduciary responsibility to each of our clients.

Whatever you can do or dream start with making good habits and take small steps. A journey of a thousand miles starts under one’s feet!

Tags: financial planning, retirement planning, planning for retirement, financial security

Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital.
Information provided in this blog is for educational purposes only and is not intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with own financial advisors, accountants, or attorneys regarding your individual circumstances as needed. No advice may be rendered by Arcadia unless a client service agreement is in place. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

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