How Wealth Accumulates

Because we are evolving beings, to accumulate wealth, we need first to create enough to sustain us. Passing this treshold of "enough," we move to "a little more than enough" to generate a remainder. This is where we create the seed of our accumulation.

Accumulation is like planting the seed of a fruitbearing tree and growing it. First, we choose our fruit variety, then we plant our seed or seedling on rich ground, initially in a small pot so we can care for it and protect it from the elements. Then, when it has adapted to its environment, we move it to bigger ground, and there, water it, nurture it, weed it, protect it, until it grows big and mature enough to bear its sweet fruits.

We can plant and grow as many seeds or seedlings as we can, or as we want, depending on our capacity for nurturing, making sure that every seedling planted receives the care and attention it needs to become a fully-grown fruitbearing tree.

Wealth accumulation is a process of saving for the future, carried out with a little more diligence, discipline and imagination. It is saving with a definite purpose, method and time.

Consider money, the most articulate representation of wealth.

I will assume that we are a typical wealth-searcher, not one in line to succeed a multi-millionaire patriarch. We've been through the early stages of infancy and adolescence, have finished a college course, and are ready to take on the world in our palms, so to speak. So, world, here we come!

So we begin to look for, and find, and earn the money, where it used to be given to us by our parents. "Nice, sweet scent of money! By my brow! My earnings!" As a token of our labor's fruits, we may frame the first P500 bill we receive (No, just the reproduction!).

So, we savor our first official expenditure. Isn't it good! And we find that spending is such an enjoyable activity. Is something left after? Of course, there is none! Paydays will come, and more paydays will come, and this pattern will be repeated, over and over again: earn, spend, earn, spend. Saving, or more so, accumulating, never becomes part of that pattern because we are concerned chiefly with creating and enjoying our earnings.

Will somebody give us a wealth shot?

Wealth begins in the mind, says Peter Daniels, a multi-millionaire who lived a life of earn-spend for so many years before he realized he was going nowhere.

Got a P1000 bill right now?

If you will examine the paper bill, you will find on one side a picture of the Banawe rice terraces, considered one of the wonders of the world. The terraces are a perfect model of the accumulation process: step by step, little by little, one at a time, until you reach the top. You can build your wealth terraces beginning today by seeding that P1000 bill you are holding right now! Seed another P1000 next month, and another next month, and another next month and so on. Do you know how much you will have after a while?

If you are diligent and resourceful in your choice as to where you plant your seeds, your money will grow to any one of these figures:

Growth of P1000 Monthly Deposits starting at age 25

Compound interest------------------------ At 60------------------------ At 65

3% ----------------------------------------------- 725,544 -------------------- 904,615
6% --------------------------------------------- 1,337,217 ------------------- 1,857,143
8% --------------------------------------------- 2,067,801 -------------------3,108,678
10% --------------------------------------------3,252,292 ------------------- 5,311,110

What your P1000 undergoes is compounding growth at selected interest rates. It's almost like magic! In fact, even Einstein described compound interest as the most wonderful discovery of the 20th century!

I will do another treat of compound interest in the next post. Meanwhile, if you have any comments or questions about this post, and the previous ones, please post them and I will diligently answer them the best I could.