Reginald, our wise mentor, with emerging saplings: Plant your tree

Reginald here. I’ve been watching with great pride as Nicholas has taken you on a deep dive into the mechanics of a company like McDonald’s. Understanding what you are investing in is a critical first step…but just as important is understanding the mindset — the core principles — that separates fleeting speculation from true, lifelong investing success.

Today, I want to step back from the spreadsheets and SWOT analyses to talk about the two foundational ideas that have shaped my own journey more than any other. They come not from complex algorithms but from two of history’s most insightful minds.

Principle #1 — Plant Your Tree: The Wisdom of Warren Buffett

There’s a quote from Warren Buffett that I believe should be engraved on the mind of every new investor:

The beauty of this is its simplicity. The tree is your future wealth. The cool, comfortable shade is the financial freedom you hope to achieve — the ability to make choices not based on necessity but on desire. The act of planting that tree? That is the decision you make today to start investing, no matter how small the sapling.

This single idea teaches us two vital lessons:

The power of starting early: Imagine two friends, both wanting to save for retirement. Anna starts investing $500 a month at age 25. Ben gets busy with life and only starts investing the same $500 a month at age 35. Assuming they both earn an average 8% annual return, by the time they reach age 65:
- Anna would have amassed over $1.6 million.
- Ben, starting just ten years later, will have less than half of that — around $700,000.

Anna has a huge lead over Ben. She gave her tree a crucial head start. This brings to mind a piece of timeless wisdom, often shared as an ancient proverb:

The necessity of long-term thinking: You don’t plant a tree and expect to sit in its shade the next day. It requires patience, water and sunlight, as well as time. Similarly, your investment portfolio requires patience, consistent contributions and time. The market will have storms — days or even years where it feels like your tree is barely growing. A long-term investor understands this is part of the process and doesn’t uproot the tree in a panic. They trust the process of growth.

Principle #2 — The Eighth Wonder: The Genius of Compounding

Once your tree is planted, an almost magical force begins to work on it. This force is best described by a quote often attributed to Albert Einstein:

“Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.”

Compounding is your money making money…and then, the new money making even more money. It’s a snowball effect.

Let’s use a simple example. You invest $10,000.

After Year 1 at an 8% return, you have $10,800. You earned $800.
In Year 2, you earn 8% on the new total of $10,800. Your earnings are $864. That extra $64 is the first bit of magic — it’s profit earned on your previous profit.

It seems small at first…but let time do its work.

After 10 years, your $10,000 grows to $21,589.
After 20 years, it grows to $46,609.
After 30 years, it becomes $100,626.

Notice the growth isn’t a straight line. The amount you gain in the last 10 years is far greater than what you gained in the first 10. That is the snowball growing larger and picking up speed. This is the force that does the heavy lifting for you…but it only works if you give it what it needs most: time.

The growth accelerates!

A Mentor’s Three Final Rules

These two principles — starting early and letting compounding work its magic — are the pillars of sound investing. To these, I would add just a few more rules from the masters to guide your actions:

Invest in what you understand

Know what you own: Finding the Real Facts — Know what you own and why you own it.

As Nicholas is doing with McDonald’s, focus on finding quality businesses with durable advantages. You don’t need to be an expert on everything. The legendary fund manager Peter Lynch says it best:

“Know what you own and know why you own it.”

Never invest in a company because of a tip. Invest because you have taken the time to understand its business and can explain, simply, how it will continue to be profitable for years to come.

Be consistent

The habit of investing regularly, even small amounts, is more powerful than any attempt to time the market with one large sum. As contrarian investor and long-time Forbes columnist Kenneth Fisher succinctly puts it:

“Time in the market beats timing the market.”

Your superpower isn’t a crystal ball; it’s your discipline. Consistently contributing to your portfolio, month in and month out, will serve you far better than any attempt to outsmart the market’s daily moves.

Master your temperament

The greatest enemy to a long-term plan is your very own emotion. Fear and greed cause investors to make their worst decisions. This is a lesson from the father of value investing, Benjamin Graham, who said:

“The investor’s chief problem — even his worst enemy — is likely to be himself.”

The market will be volatile — that is its nature. Your job is to remain rational when others are panicking and grounded when others are euphoric. Solid analysis is crucial — it tells you what to buy…but your emotional fortitude is what allows you to hold on to that great business through the inevitable market storms.

The Journey Ahead

Your investing journey is exactly that — a journey, not a lottery ticket. Plant your tree today. Nurture it with consistent savings…and give it the decades it needs to grow into something truly magnificent.

The shade will be worth the wait.

Yours in the journey 🚀
— Reginald

Watch this in action on Instagram!