As a kid, my parents would play board games with family, friends on vacation and one game that they would play that I used to love was called Wise and Otherwise. Now, if you’re not familiar with the game, the whole point of it is someone reads off the first part of a proverb from around the globe and then everybody else takes turn coming up with their own ending to the proverb, and then you eventually have to guess to find out which one is the correct ending to the proverb.

Since then, I’ve just always loved little Proverbs like that. One proverb that stuck with me over the years is that the best time to plant a tree is 20 years ago, and the second best time is today. It’s one of those things having grown up around trees that’s both simple as well as profound. We can’t go back in time and wish that we would’ve done something sooner. All we could do is make a decision today for the benefit of tomorrow.

The same concept applies to investing. Chances are there’s been some sort of investment that you wish that you would’ve jumped into, and there’s really no good in terms of dwelling on that unless it motivates you to do something. Today within financial planning and investing time is probably the most precious commodity that’s present within a person’s portfolio. Other critical dynamics like risk or gains and losses, liquidity, they’re all secondary to time because they’re all reliant on how much time an investor has to demonstrate this concept. I’ll use the eighth wonder of the world compounding interest.

Let’s assume a person sets aside $12,000 today and then does nothing with it, aside from living alone to grow at 7% for the next 30 years. Next, let’s assume that someone waits 25 years and starts contributing $12,000 a year for just the final five years. The first person would’ve earned roughly $79,000 on their original investment, which would’ve grown to be worth $91,347. The other person would’ve contributed $72,000 over six years, which would’ve grown by just shy of 20,000 to have reached roughly the same 91,000 and change threshold.

Now, this is just a basic example of the power of compounding interest and the magic of it taking place over time. You probably have heard similar examples at some point, but at the same time, it is something that can break people’s brains. It just doesn’t seem like something should be able to grow as much as it can with a little bit of interest and time. It’s usually not the difficulty of the action as it is the discipline to take the action early enough. Just like planting a tree isn’t that difficult. Taking an acorn like this and putting it in the ground starts off small, but eventually it grows to be a massive tree.

If you would like to sit down and plan out the years ahead of you, we have a process that we can go through to talk about where you’ve been and where you’re going. Neither you or I can do anything about the time that’s already passed, but we can plan for the future. One last quote that I’ll leave you with is this. A society grows great when old men plant trees whose shade they’ll never sit in. It’s believed to be a Greek proverb. And even if you don’t have 20 or 30 years ahead of you, you have the ability today to take steps to bless the next generation so that way they can receive the fruit from a tree they never planted.

I can’t resist mentioning my favorite example of compound interest from the show Futurama in it. The main character has been frozen for a thousand years and he’s got 92 90 3 cents and he left it untouched for a thousand years and it grew at two and a quarter percent interest. Okay? You had a balance of 93 cents, alright? And at an average of two and a quarter percent interest over a period of 1000 years, that comes to $4.3 billion. And the best part about the clip is that when you do the math, it actually checks out.