“Make a tree good and its fruit will be good, or make a tree bad and its fruit will be bad, for a tree is recognized by its fruit.” (Matthew 12:33)
Only after establishing a strong, thorough root system and a powerful trunk can you have a tree, which you can depend on to produce good fruit. As we look at our Fruitful Tree, the branches are your investments. The leaves are the appreciation of those investments. And the fruit is the income that we receive from your investments. When a tree is young, it may not have many branches. The more mature it becomes, the greater the number of branches and the larger the quantity of fruit you can expect. This is similar to aspects of your financial life. When you’re just starting out, you should focus on the smaller number of investments that you have, but as you build, you will have more and more investments producing for you.
If you have nourished your seed with a strong, thorough root system (contracts), and your tree’s trunk is stout and secure (you are systematically saving enough and in the right ways), you’ll have established the proper soil for a thriving Fruitful Tree.
“Still other seed fell on good soil, where it produced a crop-a hundred, sixty or thirty times what was sown.” (Matthew 13:8)
Once you have this good soil, the next step in responsible stewardship is to manage these investments to produce as much as possible while first making sure that you honor the Lord in all decisions. We’ll only speak briefly about this here and then get much deeper into how to go about this as we move forward.
Perseverance is required in order to learn to analyze investments in ways that you never have before. And sometimes, even when you have thoroughly analyzed an investment, it won’t go well. This can be disappointing and frustrating, but also brings wisdom if you understand that the investment loss is a valuable tuition, which can help you be a better investor going forward. Many people simply say, “I’ll never make that kind of investment again!” When they do this, they negate all of the wisdom they just accumulated.
Now, if they had invested in lottery tickets, then yes, the correct lesson is to learn to abstain from doing it again. But many people will leave entire spheres of investment that are quite profitable to others, simply because they lost money there before. In this case, it is much better for you not to let your emotion carry you and analyze…”Why did this go badly?” What could I have done to prevent this, or avoid this?” These types of questions enable you to really grow and prosper through the experience of a bad investment. Wisdom builds on itself, and you will always learn more from bad investments than you will from successful ones.
The most common investor mistake is to focus on potential appreciation when investing. Some get excited about what could happen if everything goes perfectly and then too often are struck down by events they did not foresee. This is why we compare tree’s leaves to your investment’s appreciation. The leaves are an important part of a tree. A tree without leaves won’t be attractive. It will also not be healthy since it won’t be able to process the sunlight shining on it. But you cannot eat the leaves of your tree. The fruit is the end result you are looking for in a good tree and that’s where the focus should be. Appreciation is a nice extra benefit when looking at investments. If captured (for example by selling the investment), than it becomes a realized gain – like income. And you can actually eat it. It can also lead to higher income in the future, so it is of value.
If you can have both income and appreciation, then you have the best of both worlds. But you must always look for income first. Appreciation might never come when you expect it. And it can disappear as quickly as it arrives as markets shift. It is wise to look for ways in which you believe appreciation will occur and look to profit from those, but don’t forget the importance of your investment sending you income regularly so that your tree is fruitful. This will insure income, as well as keep you away from investments that would otherwise go badly. This also keeps your focus on the present, which is an important key to success.
This post is _Part 5_ in a series about the Fruitful Tree. To continue with this series, click on Part 6. To use this as a growth tool to better understand your own calling, you might start by reading Pt 1, Pt 2, Pt 3 and Pt 4.
Photo credit: anthro_aya