Tuesday, January 7, 2014

A Jar of Pennies

It was cold outside. Nevertheless I stopped long enough to stoop down and pick up a penny from the pavement. A penny is not worth much but I hate to walk by and leave money on the ground. I took it home and put it in my gallon jug of coins. It was just a penny. But it was a penny. Then I got curious to know how long it would take a penny to compound into some real money. I plugged these figures into a compound interest calculator: .01$ for 70 years at 10.83%. I chose 70 years, three score and ten, the number of “good years” that most of us can expect to live on this earth. I chose $10.83% because that was the annualized rate of return on the Dow Jones Industrial for the 32 year period between 1975 and 2007. That is a healthy rate of return, perhaps a little ambitious for a 70 year average, but not as optimistic as Warren Buffet might be. After inserting those figures I clicked “calculate” and discovered that a penny invested and compounded quarterly at 10.83% for 70 years would grow to $17.73. That is enough to take my wife out to eat at her favorite pizza restaurant. But of course she expects to go there more than once every 70 years.

But then I thought “what if I had a gallon jug of pennies”? I wondered how many pennies that would be. So I googled it and discovered that a gallon jar would hold around 50,000 pennies - $50 worth. Using the same figures of 10.83% compounded quarterly for 70 years I again clicked calculate. The results were a little more encouraging. My hypothetical jar of pennies invested for 70 years would grow to $88, 628.68. I think I will continue picking up pennies.

It occurs to me that life is somewhat like a jar of pennies. Maybe we even think of ourselves as being as common as a copper penny. Even if that were true, which it surely is not, we should be able to see that we have value.  And if that value is properly harnessed we can do wonderful things. There are two things that every person has in common in life. We all have time and we all have opportunity. We do not all have the same amount of time. We do not all have the same amount of opportunity. But we all have some measure of each. My life may only be a jar of pennies. But it is a jar of pennies. If we will learn to make the most of our time and take advantage of our opportunities life will compound into something beneficial.

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