Lost my wallet but now admire the power of compounding

I had lost my wallet. I lose it on a regular basis at home, usually just before I’m about to leave the house, but this time was different – I lost it while I was out. I searched all my pockets, went back to my brand-new car and scanned the pavement outside to see if I had dropped it.

The panic started to set in. I need to call the bank. What if my bankcards are being used in criminal activity? Fumbling online on my smartphone I found the lost and stolen number for my bank and cancelled everything. The next day I ordered a replacement driving licence and bought a new wallet with some emergency cash I received from the bank. Within a week, everything was back to normal and I consigned this unfortunate event to the memory dustbin.

Years went by, when one day driving home from a visit to my mother’s – now married and with my first child in the back seat – I noticed I was running low. I pulled up into a petrol station and filled up, then proceeded to the kiosk to pay.

“Sorry, your card has been declined”, said the attendant.

Ah, how annoying I thought to myself. There must be something wrong with the card. So I offered another one. But this too was declined.

The attendant studied the card and finally said with a bemused look on his face, “Sir, this card expired two years ago”.

I look down and looked at my wallet. Yes, it was my wallet. Except, this was the one I had lost years ago. Woops.

It turns out that the central armrest had two storage compartments: a main one and more discreet one inside. I never knew this and unwittingly stored it in the discreet compartment for close to four years.

The good news was that I still had £60 ($90) in it so I used this to pay for the petrol.

I would love to say this was an isolated case, but I think these events occur frequently in my family. Back in 1989 my grandfather lectured my mother on the importance of saving and investing for the future. We had arrived in the UK from Australia months before and the last thing on my mother’s mind was an investment plan.

Nevertheless, she put a sizeable lump sum in an investment fund recommended by my grandfather and setup a payment plan. Unfortunately she forgot that she had invested this money, forgot the name of the fund she had invested into and had no idea that she had a payment plan. And, as we were living at a temporary address at the time, she lost track of the regular investment statements she once received.

A quarter of a century later, on the cusp of retirement in 2014, she had unwittingly accumulated a small fortune by re-investing and compounding the stunning returns she had made.

She had invested in the accumulation share class of the infamous Fidelity Special Situation fund, managed by Anthony Bolton up until 2007 – one of the most famous and successful fund managers in UK history (bar his unfortunate China-stint).

Now I wouldn’t recommend this as an investment strategy. In terms of portfolio diversification it was a complete disaster. She had 95% of her entire investment wealth in one fund. I can’t divulge the exact numbers because that’s private – obviously.

However, we can go back to the story about my lost wallet earlier.

Just imagine that instead of finding £60 in my old wallet, £5,200 fell out ($7,800).

Now, you have to admire the power of compounding.