was 20 years ago. The second best time is today.”
So goes the Chinese proverb, at least as far as the Internet is concerned. Maybe it was Abraham Lincoln. Or William Shakespeare.
I think of that proverb whenever I learn some new-to-me idea related to a practical area like fitness, home organization, or money.
“The best time to plant a tree was 20 years ago. The second-best time is today.”
When it comes to money, many times I wish I knew then (20 years ago? 10 years ago? Maybe even one year ago) what I know now about saving, investing, and financial goal setting.
Probably my worst “should have done 20 years ago” is rolling over a small retirement account from a former employer. It was a small account, and just a nagging issue that I had never “done anything” with it. I There was only a small amount in the account when I stopped contributing to it, and it didn’t increase much in those decades, chiefly because fees (including an annual $30 fee! ouch) ate up the modest gains.
Just over one year ago, I finally rolled over that account into a Rollover IRA at Vanguard, one of the best and lowest cost places to invest money. (I already had our Roth IRAs there, so it was even easier to start an account). In that year it grown more than in all of the prior years (19 years, to be exact) combined.
If I had rolled that over 19 years ago and put it in a general index fund … well, I ran the math using this calculator, and it made me sad face emoji. Suffice to say that I didn’t “plant the tree” many years ago. But I did act, eventually. And the “today” I finally chose is now a year ago.
Now that the money is in an IRA invested appropriately in a Vanguard account (one of the lowest-cost places to invest and save for the future), I don’t have to re-visit the account much. Compound interest (no, really, check out this calculator) can do its work, and I can focus on other things.
Too many “what ifs” and too much looking back is not very helpful, except to inspire us to do better.
Sometimes, you’re going to make mistakes with your money. Sometimes, you’re going to be smart with your money. Everyone does. But you can get better, a little at a time. Being intentional, organized, and optimized with your money is not an overnight change, but it can happen, little by little.
The second-best time is today.
And everyone can act today to make a positive change.
What have you done recently to “plant a tree”?