The $25,000 Bouquet of Roses

The Lesson in the Time Value of Money

Today, I happened to stop by a flower shop near my office and pick up a dozen long-stem red roses for the foyer of my investing company’s headquarters. Not thinking that it was near Valentine’s day, nor really paying attention, I selected a dozen premium flowers and, upon paying, realized I had just dropped roughly $93.50. That would have been fine, except it wasn’t something that I expected – but it was too late (ordinarily, we’ll pick up five or six dozen of the shorter-lived flower arrangements and keep them throughout the building for the staff to enjoy).

In the past, I’ve always counseled my readers to do the math on the future value of expenditures if the money were to be invested. Realizing that it was time for me to take a bit of my own medicine, I took out a calculator and plugged in the numbers. Assuming I earned a 12% rate of return over the next 40 years, that bouquet just cost $8,700+ in future wealth. If I could keep up our long-term rate of 15%+, the total damage comes out to more than $25,000.

Okay, I know what you’re thinking – you can’t go through life always focusing on the future value of money. Yes, that’s true. The point is that if you are going to be empowered over your own finances, you have to make conscious decisions. Although the dollar amounts involved weren’t significant relative to my income or assets, the fact that it was an automated response that I didn’t think through is what bothers me. If I were still in the early startup phase of my career, this is the stuff that can cause real trouble. It’s the pizza and beer every night for college students, or the constant ATM fees for professionals that are too busy to plan their cash withdrawals from a bank branch.

For now, I suppose you can take solace in the fact that even the professionals do dumb things every once in awhile. To add to the guilt, the flowers are now sitting on a table, centered on a wall of framed stock certificates, gently nestled somewhere between Tiffany & Company and Union Pacific. To tell you the truth, the situation reminds me of a line Ben Graham mentioned in his autobiography. At the time, he was paying tens of thousands of dollars per month – in the 1920’s! – to rent an apartment in Manhattan, yet he would often walk instead of paying for a taxicab because he felt like it was wasteful. My guess is a lot of this has to do with the fact that if you made your money the old fashioned way – earning it yourself, investing it wisely, and controlling costs – somewhere in your mind, you’re always thinking about how you’re going to pay for groceries, even if you have millions of dollars and no debt.