Patience. Where do you stand on that virtue? When the sun pokes through the clouds and the rain stops, I begin to think about preparing to plant. We start by thinking about what we want to eat this summer; we love fresh tomato sandwiches in the morning, and green beans pulled off the vine that afternoon and zucchini. We like sharing pumpkins grown in our garden with the grandchildren.
Of course, we can stop by any number of grocery stores and buy these vegetables, probably cheaper than what it cost to grow them. And then we wouldn’t waste time planning, nurturing, watering and harvesting. The bottom line is we like to grow stuff!
That’s part of the reason behind our name: Harvest Financial. Getting back to the patience question – You can’t grow a tomato overnight, and store-bought is not the same as garden-grown for a whole bunch of reasons.
The financial planning and investment management that we do takes time. One belief about our clients is that they want a plan suited to their needs. Not the same plan everyone walking into Safeway gets. We ask a lot of questions, we think about options, and we ask more questions. You call with a question about the economy and our answer is based on reading about the economy daily, knowledge and experience gained over time, and regular discussion with other financial professionals.
If you have $1,000 today and need $2,000 in one year's time, you need a 72% compounded monthly average annual return. If you can wait two years, the needed return drops to 35%, and with patience and 5 years you only need 14%. Even with 5 years, that’s is a fairly high level of risk.
Let’s put some work into it. Start with the same $1,000, but this time add $10 per month over the five years to end up with $2,000. However instead of requiring a 14% annual return, you can work with 6%.
So we purchase seeds, nurture them inside until the frost passes, plant them, water them and watch out for critters.
You can make a tomato plump up faster and make the skin of an apple shine, but those methods affect the taste. For something as important as your financial plan, put in the time and some patience, then enjoy the fruits of your harvest. Here’s to fresh tomato sandwiches in the summer!