The Time Dividend

This edition can be traced back to a simple poll I ran two weeks ago about the cost of education.

You’ll see in the results that the correct answer was guessed the least.

The most guessed answer was $124k for four years.

In total, 58% of people overestimated the cost of education in 2024.

It’s impossible to know why the results came in like this, but I wrote that my daughter Lucy’s school would cost an estimated $240k for in-state, public college in the mid-2030s, potentially anchoring reader’s expectations of the cost.

These results also mean that people, on average, underestimated the effects of inflation over a 10-15-year period.

While this is a simple poll with just 59 responses, I’ve found that the bigger the cost and the farther in the future something is that relates to money, the worse people are at understanding the cost.

Put another way, the longer the time period, the worse people are at understanding the powerful effects of compounding interest.

The manifestation of this problem is people end up underestimating what’s possible with their money.  

Never underestimate what you, time, and a solid financial plan can do.

No matter who you are, what you have, or where you start.

Time in the game pays dividends.

Just check out Progressive, a company that did this right.

Meet Progressive Corp

In the mid-2010s, Progressive Corp. would have been considered a middle-class financial services company within the S&P 500.

It didn’t have the allure of Goldman; it wasn’t a sexy tech company; its customers were everyday Americans.

Its business was insuring thousands of Toyotas and 1,500-square-foot homes across the country.

Little did anyone know that this company wouldn’t just become the equivalent of the millionaire next door, but rather, the multi-millionaire next door.

Over the past 10 years, Progressive has grown from $15b to $140b.

If you were to ask Progressive’s employees 10 years ago whether they were in the process of adding $125b in value to the company, I am sure they’d laugh and say, “No way, we’re good, but not that good.”

But that’s what happened.

They are now the 72nd largest company in the S&P 500.

And here’s what they say about themselves on their investor relations page:

“Progressive Insurance® makes it easy to understand, buy, and use car insurancehome insurance, and other protection needs. Progressive offers choices so consumers can reach us however it’s most convenient for them — online at progressive.com, by phone at 1-800-PROGRESSIVE, via the Progressive mobile app, or in-person with a local agent.”

I chuckled when I read that.

There’s no secret sauce, visionary entrepreneur or humanity disrupting AI tech at Progressive.

They just do a great job insuring cars and homes.

The fatal mistake to avoid

Progressive went from a good company to an exceptional one in ten years.

And what if you did the same?

  • You may think you don’t have a shot at a great retirement, but what if you do?
  • You may think it’s too late, but what if that’s not true?
  • You may think you don’t know enough, but what if you did?
  • You may think you’re not smart enough, but what if you were?

Almost every personal finance article I read talks about things to do now.

However, information rarely shows the ripple effects of what happens when you do money well over ten years.

So what happens?

People don’t stick to it and get stuck on the financial treadmill, thinking they are going somewhere when, in reality, they are just working really hard and going nowhere. A fatal mistake.

And the people who get it win big.

Engrain this chart in your head.

It’s Progressive’s performance chart over the past 10 years, but make it your own.

You don’t have to be Mark Zuckerberg, Elon Musk, or Larry Ellison to have a great financial life.

What if the only thing between you and a better financial life was time and consistent, simple action?

I’ve seen this play out many times in clients’ lives in my 11 years of serving families who stay invested, commit to planning, and make wise decisions along the way.

I’ll leave you with one of my favorite quotes on business from Marc Benioff, CEO of Salesforce:

“In business, people overestimate what they can do in a year and underestimate what they can do in a decade.”

Don’t underestimate what you can do when you stay at it for another decade.

Time pays larger and larger dividends to people who do the following:

  1. Save a portion of their income.
  2. Consistently invest in great assets.
  3. Have some cash for emergencies.
  4. Avoid debt.

If this sounds basic, it’s because it is.

But so is Progressive.

And that’s the point.

Do whatever you can to understand what 10 years of better effort looks like in your financial life.

If you need help pulling this together, here are two ways I can help you:

  1. Portfolio Review—Your portfolio is where your money grows. If you want to retire sooner, grow your money faster, or make more income, you must understand if your portfolio is capable of doing that. Portfolio Reviews connect your ambition and investments. 30 minutes and completely free.
  2. BluePrint— If you don’t have a financial vision for the next ten years of your financial life, you need a BluePrint. Prioritize your financial goals, optimize your cash flow, dial in your investment strategy, and build a better future in just 30 days.

Pull a Progressive and keep at it.

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