Introduction
Money is an instrument of its master’s wishes. The Virtous Circle of Arbo (from Latin Arbor, for tree) is a financial framework allowing Wessinites to buy and protect a wealdom in perpetuity. Arbo makes a large wealdom possible. More time creates more wealth and a larger, more impactful wealdom. Unlike Cirado, which has eight daily longevity rituals, Arbo is automated, requiring little maintenance. Wessinites may or may not have large salaries or businesses. Their wealth comes from Scirocco and the passage of time.
Scirocco
The Virtuous Circle of Arbo (a.k.a. The Virtuous Circle of Investment and Wealth) is one part of three of Scirocco, the Southeastern Asterwind. An Asterwind is a Wessinite custom made of a Value, Vow, and Virtous Circle (the three Vs). Each Asterwind begets a unique power—in this case, wealth.
Scirocco is made of the Value of Conservation, the Vow of Investment, and the Virtuous Circle of Arbo. When observed over time, Scirocco yields wealth. Wessinites value wildlife conservation. They take the Vow of Investment. They practice Arbo to create wealth and buy and maintain their wealdoms, where they and their families live as stewards.
The Five Funds
To practice the Virtous Circle of Arbo, Wessinites build five funds in sequence (1) Checking Account, (2) Emergency Fund, (3) Large Purchase Fund (LPF), (4) Wealth Fund (a.k.a “investment fund(s)” or “retirement fund(s)” and, if the Wessinite is a parent who lives in a country without free higher education, an (5) Education Fund. The first three funds provide the optimal environment for the Wealth fund to do its job.
(1) CHECKING ACCOUNT
2) EMEREGENCY FUND
3) LARGE PURCHASE FUND
4) WEALTH FUND
5) EDUCATION FUND
FUND 1: CHECKING ACCOUNT
Wessinites start their Arbo journey by opening a checking account. This fund is the hub of a Wessinite’s financial dealings, allowing for automated deposites and withdrawals, freeing the Wessinite to think about other things. Wessinite parents open checking accounts for their children, preferably in their children’s presence. This normalizes the practice. It gives children an opportunity to start their financial journey with love and guidance. As soon as a Wessinite becomes employed, automatic deposites should be arranged so that each paycheck goes directly to the checking account without the Wessinite having to make a trip to the bank.
FUND 2: EMERGENCY FUND
Life is unpredictable only in the details. We know an emergency will happen. We do not know whether it will be a tree falling on a roof, a car accident, an illness, or a job loss. Regardless, Wessinites prepare for emergencies by way of a fund separate from all others.
How much to put in the emergency fund? If you lost your job suddenly, how much money would you need to survive until you found another job? What would give you peace of mind? An emergency fund is insurance, not an investment. Insurance costs money.
To build your emergency fund, Wessinites first stop borrowing money and create a monthly budget. Obtain a debit card from your banking institution, if you do not already have one, and cut up any credit cards that you may have. Call the credit card companies to close the account. Create a budget on paper or spreadsheet, or consider using a budgeting app that links directly to your checking account. Budget apps are, by far, the easiest way to create and maintain a budget, but some of them have monthly or yearly subscription fees.
THE WEALD’S WAY: I currently use a budget app called EveryDollar, which has a yearly subscription fee. For years, I used Mint before they discontinued their free budget feature.
Using your budget, save one thousand dollars and set this aside as your emergency fund. Then, pay off all of your debts from smallest to largest. When your debt is paid off, fully fund your emergency fund. Some financial advisors recommend putting three to six months of expenses in your emergency fund, but this may or may not be right for you. Some people need a year’s worth of income to feel (and actually be) secure, while others may need significantly less. Once you build your emergency fund, arrange for a small automatic monthly deposit to stay ahead of any emergencies and inflation.
Keep your fully-funded emergency fund in a place that, while accessible, is not easy to get to, like storing last summer’s vegtables in the deep freezer of your basement. You can get it to it if you need it, but it takes some work. Consider a high-yield money market fund or a high-yield savings account for your emergency fund. Use this fund only for the unpredictable. A new couch is not an emergency. Neither is a vacation. Save for these expenses using your large purchase fund.
FUND 3: LARGE PURCHASE FUND (LPF)
Except for perhaps buying a first home, Wessinites do not borrow money. Consequently, they create a large purchase fund (LPF) to save money for cars, land, home improvements, furniture, vacations, and other large purchases. Money market accounts or high-yield savings accounts make good Large Purchase Funds. Owing to the short-term volitality of the stock market, if the Wessinite plans to spend the money in five years or less, it is better to set the money aside in a money market or high-yield savings account. Make a list of all of your large purchases and prioritize them. Using your budget, arrange for monthly automatic deposites into your LPF.
FUND 4: WEALTH FUND
After you have started a budget, paid off all your debt (except your house), completed your emergency fund, and have created a large-purchase fund, it is time to build wealth using tax-advantaged mutual funds. All of these funds are collectively grouped in a Wessinite’s Wealth Fund.
If your employer has a retirement matching option, then invest there first. In the United States, this is commonly known as “employer matching” whereby every dollar the employee invests the employer matches it dollar-for-dollar up to maximum amount. It’s essentially free money.
If you are United States citizen, after you have invested the full match amount, open a ROTH Individual Retirment Account (I.R.A.). If you are a citizen of country other than the United States, invest in your country’s equivalent. In Canada, for example, the I.R.A. equivalent is the Tax Free Savings Account (T.F.S.A.). In the United Kingdom, the equivalent is the Individual Savings Account (ISA) and Self-Invested Personal Pension (S.I.P.P.).
After you have maxed out your Roth IRA ($7,000 as of 2024, $8,000 if you are age 50 or older) or your country’s equivalent, then go back to your employer’s retirment plans and invest up to the maximum amounts there (401k, 457, etc.), based on your budget. If you do not have children or a home mortgage, more of your discretionary income can go towards your wealth fund.
If you have children and/or a mortgage (and you live in a country in that does not pay for higher education, like the United States) then invest 15 percent of your gross income in your wealth fund and use the remainder to invest in your higher education fund and pay off your home. Once you pay off your home, you can raise your contributions to your wealth and education funds.
Investments should be made in a highly diversified mutual fund(s) with a proven track record over at least ten years. Your portfolio should reflect investments in large capitalization stocks, small capiltilaization stocks, medium capitalization stocks, and international stocks. Diversification allows you to better manage risk since all of your money is not tied to the fate of a few stocks.
Historically, the return on stocks is much higher than the return on bonds. As long as you are investing for the long-term within tax-advantaged retirement accounts, there is little need to invest in bonds. Bonds are essentially debt devices backed by the borrow’s credibility. Corporate bond are when corporations borrow money. Government bonds are when governments borrow money.
Just as Wessinites do not borrow money, neither to they lend it. It is better for a Wessinite to give money away, especially to family members, rather than lend it. For Wessinites, debt is a form of enslavement. Do not become a slave by borrowing money. Do not enslave others by lending it.
FUND 5: EDUCATION FUND
Unlike the other funds, the need for an education fund is largely dependent on a Wessinites family structure and local. If the Wessinite lives in a country like Germany, Switzerland, and France, then higher education costs are largely subsidized by the government. However, if the Wessinite lives in a country such as the United States or the United Kingdom, then the Wessinite is largely responsible for paying for an advanced degree.
An advanced degree is not an option for a Wessinite. It’s a necessity. Aside from the financial benefits of higher education, Wessinites value the vocational, health, social, and critical thinking skills that are also obtained. Consquntely, Wessinites take the necessary measures to see that they and their children have an advanced education without resorting to debt.
If you are a parent, and you live in a country that does not pay for higher education, start an education fund as soon as possible after the birth of each child. In the United States, a 529 college savings plan is a good option. It allows the the contributions to grow tax free and, as long as the fund is used for qualifying education expenses, the withdrawals are not taxed either. In Canada, the most popular education savings plan is the Registered Education Savings Plan (RESP). Like the 529 plan, investments in the RESP are allowed to grow and be withdrawn tax free. There is also the possibility of government matching if income requirements are met. In the United Kingdom, which has increased the cost of higher education for its citizens over the last few decades, the University Savings Plan is a popular option for tax-free investments for educational purposes.
Conclusion
Wessinites value wealth as a means to freedom and a Wealdom, a private wildlife sanctuary where the Wessinite lives as a steward. Wessinites do not depend on large salaries, or a highly risky business ventures, to become wealthy. Rather, they use time and the Asterwind, Scirroco, which is made of the Value of Conservation, the Vow of Investment, and the Virtous Circle of Arbo.
To create the Virtous Circle of Arbo, Wessinite make a budget, stop borrowing money, and establish Five Funds: (1) Checking Account, (2) Emergency Fund, (3) Large Purchase Fund, (4) Wealth Fund, and, if the Wessinite is a parent, an (5) Education Fund. Automatic monthly deposits are arranged for each of these funds based on a Wessinite’s budget.
The Wealth Fund is like the mitochondria of Arbo in that it generates the raw energy. Dividends and share appreciation are reinvested into the Wealth fund to create more dividends and appreciation creating a virtous circle of investment and wealth. Wealth allows a Wessinite not only to provide for the needs of a family, but also to buy, protect, and maintain a Wealdom in perpetuity.
