The Harvester's Two Contracts
Two farmers plant identical orchards — same trees, same soil, same weather, thirty years of growing ahead. Both owe a share of their fruit to the harvester (he's non-negotiable; he has a badge). But they've signed different contracts.
The first farmer's contract says the harvester visits every autumn and takes a quarter of that year's fruit — including a quarter of the seeds. Each spring, the farmer replants what's left. His orchard grows, but every generation of trees is planted from a diminished pouch of seeds, and the shortfall compounds: fewer seeds mean fewer trees, which mean fewer seeds, forever.
The second farmer's contract says the harvester visits once — at the very end, or in some versions of the contract, never at all in the orchard, having taken his share from the wages that bought the first seeds. For thirty years, every seed gets replanted. Same trees, same weather — and at the end, even after the harvester's final visit, the second orchard dwarfs the first. Not because the trees grew differently, but because compounding was never interrupted.
Here is what most investors never fully register: you get to choose your contract. The investments are the trees; the account they sit in is the contract with the harvester — and governments on both sides of the Atlantic offer versions of the second contract to anyone who fills in a form. This lesson is about the wrappers: what they're worth (the answer is six figures), how they differ between the United States and Europe, and the universal order in which to fill them.