Creating an Enduring Legacy

I recently finished reading a very interesting book (“Dictator”) on the life of the Roman statesman Cicero. Here was a man from lowly origins who used his brilliant intellect and oratorical skills to rise meteorically through the Roman political system and be elected consul at the youngest permitted age of forty-two. What stayed with me was a passage at the end of the book.

“If only you will look on high and contemplate this eternal home and resting place, you will no longer bother with the gossip of the common herd or put your trust in human reward for your exploits. Nor will any man’s reputation endure very long, for what men say dies with them and is blotted out with the forgetfulness of posterity. All that will remain of us is what is written down.”

The last sentence made me reflect on what else we can do to be remembered. Stu’s Stew probably won’t cut it. As I have tried to do myself, and written about before, creating inter-generational wealth is also a worthwhile legacy. God knows how our grandchildren are going to afford expensive educations and houses. But how to do it?

To my mind, the single most important determinate is to have a long-term perspective, investing beyond oneself and letting compounding work its magic. Investing for the long-run means thinking in terms of decades not days or months. When you invest with this perspective you will naturally gravitate towards great businesses that have stood the test of time and will in future continue to compound your wealth. The longer your money has to compound, the more it will grow. If you build a portfolio of high quality dividend growth stocks you should never have to touch your capital. This means you and future generations can benefit from the effects of compounding principal indefinitely.

So remember,

1. Invest in great companies for a long time.
2. Let compounding works its magic.
3. Don’t touch your capital.

Keep repeating the above and instill it in your children and grandchildren.

Remember, 100 years from now, Stu’s Stew will have been long forgotten but, if you had invested 1 million dollars as described above and it compounded at 9% per annum (historical average return), it would have grown to an astounding $5.5 billion.

So Stu’s Stew will have been forgotten but, hopefully Stu will be remembered for the legacy he created, much as my great grandfather Sir Herbert Holt is.