• July/August 2018

Starting early is key to
financial success

By Tim Schut
First PREMIER Bank

I want to preface this article by saying I neither encourage nor condone gambling. But of course, I do enjoy a good round of golf and these two “hobbies” often intersect.

I was on the golf course one afternoon when a friend asked that age-old question, “When’s the best time to begin planning for the future?” The answer is simple: the best time to begin is yesterday and the second-best time is today.

To illustrate this point, I like to use the following example: if you were golfing with a friend and made a friendly bet of 10 cents on the first hole, but then doubled that bet on each of the following holes, would it be worth your time? Maybe not, but let’s look at how this friendly wager grows over 18 holes.

On hole #2, the bet would grow to a whopping 20 cents. By the time you finished the front nine, however, the bet would grow to $25.60. That’s probably not an amount that would scare too many people away, but just wait until you make the turn and hit the back nine!

Time is one of your most important assets when it comes to investing.

On hole #10, the bet would be $51.20 and by the time you hit #14, the bet would grow to $819.20. As you teed up on the final hole, that 10-cent bet on Hole #1 would have grown to $13,107.20. Now that’s a serious bet and it’s also a serious illustration of how compounding interest can affect your investments.

This analogy sums up the concept of compound interest. I like to share it with young professionals, as they are metaphorically standing on first hole of their career. If they begin saving and planning for their future early, they will have time to play both the front and back nine. In fact, they may have time to play another nine or even eighteen holes if they begin early enough and are diligent in playing the game.

Time is one of your most important assets when it comes to investing. By starting to save early, you have plenty of time to play all 18 holes on the course and reach the big prize. Unfortunately, the person who begins saving at age 50 or 55 will probably not have enough time to reach the back nine, where the big payoffs are made.

If you find yourself standing on that first hole and you’re starting to see a little gray in your hair, don’t despair. As I said earlier, the second-best time to begin planning your future is today. A qualified financial professional can help you create an investment plan that works for you and your unique situation–regardless of where you are on the course and what your handicap might be!

The example I used above is for hypothetical purposes, of course. This scenario assumes you win every hole on the course. Your own investment may perform better or worse than it did in this example and past performance does not guarantee future results.


Tim Schut is the vice president of Private Banking and Wealth Management at First PREMIER Bank in Sioux Falls. He has nearly 20 years of professional, financial experience and specializes in private banking and investment management.

Thank you to our Chamber News Premium Sponsors

  • img
  • img
  • img
  • img