Monday Over Coffee: "It All Accumulates"

Published February 6, 2023 by Greg Funderburk

Compound interest always works in your best interest!
— Mr. Honest Money

A few years back, our church began offering a series of summer Sunday morning classes to our school-age kids—a variety of hour-long courses that touched on vital life skills, introducing them to different vocations and professions, and prompting their imaginations to explore such things further as they matured. There were meal-preparation demonstrations for those curious about cooking. Police cars and ambulances rolled into our parking lot providing kids opportunities to speak with officers and paramedics about their work. There were lessons on architecture, music, sewing, and rocket science. I think we even had an astronaut on campus at one point.

As the church's little Sunday morning academy developed, my wife Kelly, a lawyer with an MBA from University of Texas, was asked to prepare a course on money management. She went about preparing it, acutely aware of the draw of the other compelling courses being offered, and elected to spice up her offering by recruiting our teen-aged son Hank to portray for her students a colorful yet rigorously ethical character with a nose for business named Mr. Honest Money. As her class began, Kelly and Mr. Honest Money encouraged the kids to pick and follow stocks prudently, to trade prized commodities like candy and Pokemon trading cards, and always to remember the importance of giving from one's earnings.

However, even with Mr. Honest Money's dynamic personality, his sound financial advice, and the Pokemon cards, strangely his lessons remained less in demand than those of the chefs, the first responders, and the astronaut. Nonetheless, those who matriculated under Kelly's curriculum and Mr. Honest Money's prudent tutelage certainly learned some useful lessons—chief among these being the power of compound interest.

"Compound interest," Mr. Honest Money suggested to the kids, "is like a bag of Halloween candy that makes more candy. And the new candy makes more candy too. And the new, new candy—well it makes more candy, as well. In fact, it keeps going and going. Compound interest," Mr. Honest Money gleefully asserted, "always works in your best interest!"

And it does. Warren Buffet once said he owes his wealth to the good fortune of where he was born, his genetic makeup, and the power of compound interest. When Albert Einstein was asked what was the most powerful force on earth, he answered: "Compounding interest."

The term, of course, refers to the interest an investor earns on his or her original investment—plus all the interest earned on the interest that is accumulated over time. For instance, say you've saved $1000 at age 24, put it in a conservative mutual fund, and left it there, committing then to sagely contribute $150 every month to it whether the market is up or down but averaging an 8.5% annual return. In 40 years, as you approach a traditional retirement age, the funds contributed ($73,000) will have grown to $635,404. Enough for Mr. Honest Money himself to doff his tall green hat and exclaim to you, "Well done!"

As is often the case, what's true in one realm of life is true in others. In our educational endeavors, the ideas and notions we learn in a particular field build on one another. Connections are made between and among concepts, advancing us deeper and deeper into more innovative and sophisticated ways of thinking about a subject. Experience works like this too. The first time we do something, it's often difficult, but repeating an experience advances our understanding exponentially of the nature of the thing at hand as we build up an almost magical intuition about how to accomplish it more effectively. Our relationships work like this, as well. The more quality time we invest in a good relationship the more value emerges from it. And finally, our connection with God is the same also. A friend of mine once suggested to me that those who know God's Word the most seem to hear God's voice the best. It's that accumulated knowledge of Scripture that tends to open our eyes and ears to what we ought to do when in a pinch. That is to say, it all accumulates.

Unfortunately, something of the opposite is true too. Credit card debt accumulates quickly. Bad habits tend to accumulate and trap us. Unhealthy relationships seem to accumulate more and more dysfunction. Wasting time seems to beget more wasted time. And neglecting our discipleship leads us further away from God. It all accumulates—one way or another.

With this in mind, we ought to take this lesson to the bank: each and every moment of our lives is crucial, not just in and of itself, but in what it's accumulating.

God — May I accumulate wisely. Amen.

— Greg Funderburk