Pastor Rick Warren of Saddleback Church recently wrote a devotional about reaping and sowing. His article focused on planting seeds and waiting for them to grow. He mentioned how people get irritated over the delay between the time a seed is planted and when it bears fruit.[1] Patience is a virtue.
In another post, he highlighted how one kernel planted does not equal one kernel grown, but it can yield 100 times the original amount. For example, one tomato plant can produce 200 tomatoes in a single season.[2]
At 2005 years old, General Sherman is one of the largest trees on the planet at close to 275 feet high and 103 feet in circumference.[3] It probably grew fast in some years, slow in others. It has lost a branch or two, but it’s still growing. It has survived rain, fire, wind, and snow. To my knowledge, no human hand has helped it grow. A single seed sprouted, and the rest is history – a long history!
Investing and gardening have many similarities. It requires patience and discipline to create generational wealth. Most people start small by investing what they can, when they can. It’s better to invest today with a small amount of money rather than waiting to try to accumulate a large sum before putting your money to work, remember General Sherman started off as a tiny seed.
If you invested $100 per month in the Vanguard 500 Index fund from 1976 to 2018 your account balance would be worth $879,716 today.[4] The fund generated an average annual return of 10.93%. Despite the stellar growth, it experienced a few down years – seven to be exact. It had 12 years where it delivered returns between 1% and 10%. So, 45% of the time it made less than 10%. The patient person was rewarded for staying the course. The impatient one probably didn’t reap the benefits. In fact, the 15-year average annual return for the fund was 9.17%. The investor return was 7.94%.[5]
The buy and hold investor was rewarded by the gravitational pull of the markets and the constant drip of saving monthly.
If you’ve had the opportunity to plant several trees, bushes, or flowers, you know some will grow fast and others will grow slow. They’ll sprout and bloom throughout the year. This is true for investments, especially in a diversified portfolio. If you own several investments, you’ll experience different growth patterns. This year a few technology stocks are leading the market. In 2017 international investments outperformed US companies. In 2008 bonds outperformed stocks. Investments, like plants, will grow on their own terms. However, if you stay committed to your entire portfolio over time it will bear fruit.
Plants take time to grow. There’s no such thing as instant maturity. No farmer goes out, plants the seed in the ground, comes back an hour later, digs it up, and expects it to have grown. You’ve just got to let it be. Leave it covered, and let God grow it in his time. ~ Rick Warren
July 24, 2018
Bill Parrott is the President and CEO of Parrott Wealth Management firm located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process.
Note: Investments are not guaranteed and do involve risk. Your returns may differ than those posted in this blog.
[1] https://pastorrick.com/you-will-reap-your-harvest-in-just-the-right-time/?roi=echo7-33557633288-52999209-08bdf0f509462d040172c456356cf79e, July 19, 2018
[2] http://www.thejournal.ie/readme/giy-gardening-opinion-3864153-Feb2018/, Michael Kelly, 2/24/2018
[3] https://en.wikipedia.org/wiki/General_Sherman_(tree)
[4] Morningstar Office Hypothetical Tool, 8/31/1976 to 6/30/2018
[5] Morningstar Office Investor Returns