In the spring of 2008, Barry and I purchased and planted a variety of heirloom tomatoes. As autumn approached, I chose the best tomatoes from my favorite plants, diligently removed the seeds, and stored them in a cool, dark, and dry place. In February of 2009, I carefully planted these tiny seeds in small containers filled with rich soil and placed them near a southern window in my home. They did just what seeds are supposed to do, and after five months of anticipation, Barry and I gathered and savored our first tomato from the garden. Now, one month later, we have moved into full scale operations for drying, canning, and freezing an abundance of tomatoes.
This is the rhythm of a garden. From tiny seeds folded into intensely prepared soil and blended with a healthy dose of anticipation, mixed with staying after the bugs and weeds while constantly monitoring moisture, to the joy of picking the first few vegetables, to an abundant payoff in a short, sweet sixty to ninety day period filled with wonder and gratitude.
Bountiful gardens require a lengthy period of time in preparation, tending and monitoring for a brief and glorious display of the abundance of nature.
With all of the complexity that surrounds investing and wealth management, it too is a natural cycle. We prepare, tend, and monitor for many years, and then harvest our abundance for a relatively short period toward the end of our lives.
Even investment cycles, for all their seemingly incomprehensible volatility, follow a harvest cycle. There are long periods of little or negative market return, interspersed with brief intense periods of upward movement. Consider these facts:
- In the 82 years between 1925 and 2007, one dollar invested in the S&P 500 grew to $3,186. If you missed the best 37 months (out of 984) of market movement, your one dollar would have been worth a mere $19.17.
- If you invested $10,000 in the S&P 500 in the beginning of 1980, it would have grown to $286,000 by the end of 2007. If you missed the best ten days, your return would have shrunk to $131,000, a 54% difference for missing ten days out of twenty seven years.
What are the lessons of the harvest? Can we use those lessons to give us more peace and optimism about today and the future?
Planning, patience and persistence pay off when it comes to a garden. Ditto for wealth management and investing.
Studies show that individuals with a financial plan achieve more wealth that those without a plan. Just as in gardening, financial planning pays off in tangible rewards. Patience and persistence are required to be a successful gardener. You cannot hurry a tomato to ripen or wish an ear of corn into its sweetness. Rather you have to care and tend the garden, and the harvest takes care of itself. The same is true for investing. We care and tend by devoting time and energy into developing and researching our investment plan, followed by action and monitoring our results.
Worry, denial, lack of attention, lack of planning, either make our garden less productive or make no difference. The same is true for our financial life. Losing sleep over our portfolio does not make a nickel’s worth of difference. Lack of attention however, means that our results are more like a crap shoot that a targeted result, just as it would be in the garden.
When you look at your own behavior around your personal finances, how much energy do you spend in planning, patience and persistence? How much in worry, denial and lack of attention? Do you need to make a new choice?
If you are not getting the results you want in your money life, and you are spending your energy needlessly on things that make no difference, focus on the activities that matter: planning, patience and persistence. Then wait, anticipate, and enjoy the harvest.
by Mackey McNeill
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