If there's one investment lesson Don Wharton learned from his younger self, it's: hold on.
Hold on to real estate. Hold on to stocks. Hold on to investments.
Hold on to everything.
Don Wharton's long-term investment focus was born out of a critical lesson he learned from his younger self: the benefits of compounding almost always outweigh short-term gains.
Now, Don's focus is long-term, but it wasn't always that way...
The Power of Compounding
Compounding is actually a very simple concept, but few people can really understand its power until they experience the benefits-or downsides-firsthand.
For example, an account with $10,000 in it that earns 5% annually will earn $500 in interest in year 1. With compound interest, it will earn only $525 in year 2.
At first, this doesn't seem like much. And most people would rather have the security and flexibility of having the $10,000 in their pocket rather than in an account.
However, given scale and time, compounding benefits are exponential.
Lessons From Don's Younger Self
In 1993, Don was living in Edmonton earning $60,000 per year. He decided to buy a $150,000 home and find roommates to help bear the costs. A few years later, he sold the home for roughly the same price.
He considered this a win, since he'd been living there for a few years while his roommates were bearing most of the expenses.
However, just a few years later, the price of homes in that same neighborhood were selling for $450,000.
His short term gain of living "rent free" pales in comparison to what he would have made had he held on and let compounding work its magic.
Next, he moved on to Calgary where he began "flipping" houses, the process of buying homes, improving them, and selling them immediately for a profit. He flipped 5 homes in just 18 months at an average profit of ~$20,000.
Sounds great, right? Well, property values more than doubled in Calgary in the coming years. Selling those same homes a few years later would have netted him ~$1,200,000!
He even tells of how in the 1990s, he let go of Apple Stock at 14 cents a share. If he had just held on through the bull market, it would have been worth upwards of $100 MILLION today!
Applying Life Lessons to Business Investing
Don might not be able to buy a home in Edmonton for $150,000 anymore.
And instead of $.14, Apple stock is now worth $170 a share.
But he has applied this key life lesson into the business strategy that has made him the successful investor he is today.
From his first SaaS venture ParetoLogic (2004) to his current SaaS acquisition firm SureSwift Capital, Don now plays the long game.
ParetoLogic started as a small family venture, but rather than selling early to cash in and get out, Don held on and eventually grew ParetoLogic into a company featuring 20 products and 100+ employees.
SureSwift capital focuses on acquiring a portfolio of high-growth companies in the SaaS arena. The company gives investors the chance to co-own a basket of SaaS products. That way, they can enjoy the benefits of regular dividends and share in the asset's appreciation over time. In a few years, Don is confident they'll be worth far more than what he invested in them.
So, if there's one lesson we can all learn from Don's younger self it's: hold on and enjoy the benefits of compounding.
