planting a baby tree

The best time to plant a tree

The best time to plant a tree is 20 years ago.
The next best time to plant a tree is now.
— Chinese proverb


If ever there was a proverb to fit my situation, it is this one. Do I wish I had planted my passive income orange tree 20 years ago? Yes, without a doubt. If I want a tree, what should I do? Plant one now. So that is what I’m going to do.

Before you plant something though, there is preparation to be done.

I could just throw an orange seed in some sand and expect it to grow, but you know, that might not be the best approach. Taking some time to think through how I want to go about my sowing and reaping will pay off in the long run.

(For those who are worried, I WILL eventually exhaust the orange tree metaphor. Relax. Drink some juice, it’s good for you.)

Understand oranges

Seriously, if you want to reach financial independence, you really need to know a little bit about money. How do you get it? How do you spend it? How do you manage it? How do you grow it? These aren’t minor details, these are the basics for understanding how to achieve your goal. You could pay someone like a financial advisor to figure it out for you, but I’m going to assume that if you’re reading this, you’re a hearty and thrifty sort who wants to do some figuring out of your own.

So get yourself some books. You could buy some or you could check some out from the library. You could listen to audiobooks on your commute like I do. You could read blogs and educational sites like Investopedia and the Bogleheads Wiki.

However you choose to do it, just do it. Educate yourself.

Clear a patch of ground

You’re not going to want to plant an orange tree in a patch of ground that is littered with rocks, bugs, and trash, better known as debt, debt, and DEBT. You’re going to clear that shit posthaste. You’ve heard a lot of people say this, I’m sure, but you might not know why it’s such an emergency.

If you have debt, chances are very high that you are paying for the privilege of borrowing that money in the form of interest. If the interest you’re paying is higher than the potential returns on money you save and invest, then you are bailing water out of a leaky boat. (Oh, I changed metaphors on you. Surprise! Don’t get too comfortable.)

You want to take care of your debt BEFORE you save your money because in a way, clearing off debt comes with a return of its own.  If you owe $1000 at an interest rate of 25% per year, then if you paid nothing before the end of the year you would owe $1250.  If you pay off that $1000 before you owe anymore interest, then you have just saved yourself $250. BOOM! A 25% return on your money.

Let’s say you owe that $1000 at 25% like in the previous example, but you also have invested $1000 and can expect to get a 10% return before the end of the year.  That means that by the end of the year you will owe $250 on the debt, and you will have gained $100 from the investment. The difference? -$150. You’re still in the hole, darling.

Pay that shit off.  Don’t plant your orange tree in a gross, sucking bog of pain and suffering.

Get an orange seed

Okay, you’ve cleared your land and now you need something to plant. Get yourself seed money! (Hah! The metaphor wins once again.)

I’m going to go out on a limb here (ahem) and assume you have some sort of investable money. That’s what you’re going to save and invest. Some people like to put some of that money aside in an interest-bearing money market fund or savings account to use in case of emergencies. Other people decide they don’t want to do that, for various reasons. There are pros and cons both ways, which we can revisit on another day. For now, let’s just assume that you’ve got some money and you want to grow it.

Plant that sucker

Really, that’s all you do. There are a lot of different places you could put your money, and there is a sequence for investing your money that will make the most for you in the long run. For the sake of our example, I’m just going to assume you have a good place to invest your hard-earned cash.

Protect the seedling

You, my friend, have a little baby orange tree. Protect it. Love it. That means that when the skies get cloudy and the proverbial “rainy day” comes, you aren’t ripping that thing right out of the ground before it has a chance to grow. Do whatever you need to do. Leave it there.

Feed it!

You know what helps a little baby orange tree grow? Water, sunshine, and maybe a little bit of plant food. In the investing world, these are called additional contributions.  You want to keep contributing to your investments as they grow. The more you contribute, the more your investment grows exponentially, through a nigh miraculous phenomenon known as compounding growth.

Say your baby orange tree grew up. And then it made oranges. And then those oranges went to seed, fell to the ground, and grew new orange trees. Then those trees grew up and made oranges. Get the picture? Compounding growth. You want to let that happen before you start picking any oranges (taking distributions/withdrawals from your investment).

Retire to Florida and eat oranges all day

Or somewhere else that is actually pleasant. (Just kidding, Florida. Mostly.)


Further reading:

5 thoughts on “The best time to plant a tree

  1. PK

    Great analogy. Loved it.

    • Thanks, PK! I’m glad it resonated with someone. 🙂

  2. Well! Well!! Well!!!

    Congratulations Ms. FIbeDie on your journey. I know sometimes it is not easy. So don’t beat yourself up. I didn’t really start on my FI journey until I was 50. That was when I got married (for the first time), and after three days of being married I realized I hadn’t saved any money! I had saved money, but only in 401k and IRAs. No real cash. Very difficult to buy a house with no cash. So it took some shenanigans to get to buy a house.

    Your blog title and subject, in addition to the famous quote, bring to mind something I say. Since I live in the SD Bay Area, one common topic everyone talks about is the high cost of real estate. So when people talk about it, I say:

    “I know how to buy a house in the Bay Area.”

    and everyone perks up and asks: “Oh, how?”

    I say:

    “Buy something twenty years ago. That’s what I did.”

    I don’t mean to be sarcastic. But the reality is that the difficulties of the past always seem smaller than those of the present.

    Good luck!

    • Thank you! Your parallel analogy about buying a house in the SF area is right on. Housing in my city is bonkers too.

      I appreciate the encouragement! It’s always reassuring to hear from someone who has figured things out a bit late too.

      I look forward to checking out your latest blog post!

  3. typo. I meant to type
    “Since I live in the SF Bay Area….”

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