Planting a Money Tree

Earlier this year, we planted a small, rather pathetic-looking, maple tree in our backyard. This tree was about 6-feet tall when we planted it and it really served no purpose except to provide a little bit of food for the deer who came by to eat its leaves. It does not provide much shade and currently only serves as something extra for me to mow around.

Right now, the tree is pretty pointless. 

Yet, we still planted it, and millions of other people plant trees around their homes every year. Of course, we know that eventually the tree will grow into something beautiful and we will enjoy the shade and color that it provides. 

We just have to wait for the tree to get a bit older.

Investing is kind of like this maple tree that we planted.

When we first invest, there isn’t much there to show for all of the hard work and sacrifice that we made to save up the money. We cut out excessive Cokes, postpone buying shoes, and get rid of our cable TV package to save $100 one month. We use this money to buy an index mutual fund, because some financial blogger said that index funds are “better than other mutual funds because of their low fees”.

We invest this money because we are adults and adults are supposed to save for retirement and invest in the stock market. And we are rewarded! After our money has been invested for one month, it has grown!

To $101.47!!

Oh s*** … 

I gave up cable for $1.47!

Or maybe, like my maple tree being eaten by the deer in my backward, our $100 investment is now worth $96.24. 

Why did I give up cable, again? 

But maybe, we keep giving up cable, buy less fast food, and drive 50 miles less during the next month. We save $120 this time and put it back in that stupid index fund. Our $220 has only grown to $221.94, but at least it didn’t decline this month.

During the third month, we sell a couple of things from the garage and find $120 to invest again. Now, our index fund has grown from $340 to $349.14 and we are finding that it is a little bit easier to invest.

Like the 6-foot tree in my backyard, the amount of money that we have invested is still relatively small, but we have saved $349.14 in 3 months!!!

We no longer even need to water the tree or think (too much) about investing money, because we just set up an automatic investment from our paycheck each month. It is (somewhat) painless.

One day, I will look outside and find a fully grown tree in my backyard. It will provide a lot of shade and be beautiful to look at during the changing seasons here in Michigan. I probably won’t even notice the tree growing, but I may remember that day many years ago when we first planted it. That day when I first had a vision for what the tree could become in the future.

Like the maple tree, our index fund will also grow. A lot! Instead of growing by $1.47 per month, our index fund will grow by $1,000 or $3,000 or even $10,000 per month. We can keep saving this money or even use some of it to invest in other projects, retire early, or be charitable to others.

We have planted a money tree. 

My maple tree will never stop providing shade and our money tree will never stop providing money. We can withdraw an average of 4% from it per year, and the money tree will continue to get bigger for the rest of our lives. 

My family and I planted a money tree. We are watering it, watching it, and noticing that the amount of shade that it provides increases every year.

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Have you planted a money tree? Was it tough to plant? Or could you  plant a money tree today? Let us know in the comments.

And thanks for reading!

~Nathan

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Let’s keep living a great life … with the help of money. So what’s next?

• You can travel for free by using rewards credit cards.
• You can get motivated and get out of debt.
• You can check out the next post or the previous post and continue to learn.

But no matter what you decide to do, let’s leave the ordinary behind and take action today!