From Greg Wilson, chief analyst, the Legacy Portfolio: Two hundred miles north of Los Angeles, at the southern end of the Sierra Nevada Mountains, stands “the President.”

Residents of California might recognize the area as Sequoia National Park. And “the President” refers to a sequoia tree.

This one just happens to be the second-largest tree on the planet.

It’s not only the largest living thing but the fastest growing. And I think it’s about 3,000 years old. And it’s glorious!—Climber on the 2012 National Geographic Sequoia Expedition

From a tiny sapling, the sequoia can grow up to 250 feet tall, the equivalent of a 25-story building. And it can get up to 30 feet wide, the length of two Honda Accords end-to-end.

Legacy investing is like a growing sequoia tree. It starts small but can grow to incredible heights.

  Take the example of Grace Groner…

Grace worked over four decades at Abbott Laboratories. Not long after starting in 1931, she made the decision to buy three shares of this Legacy-like company.

Her total investment was less than $200. That was her tiny sapling.

She never bought another share.

Like the great sequoia tree, Grace’s investment grew year after year. By the time she passed in 2010, her tiny sapling of an investment had grown into a great sequoia, worth over $7 million.

So how did Grace achieve such a fortune? In a word… compounding.

Compounding is the concept of an asset generating earnings, which are then reinvested to generate their own earnings.

Albert Einstein called compound interest “the greatest mathematical discovery of all time.”

We agree. But how do we put compounding to work in the Legacy Portfolio?

Picture the rings of a tree. The center is our portfolio of dividend-paying stocks. Those stocks pay us dividends… our “interest,” so to speak. And we take those funds and buy more shares of Legacy stocks, like a new ring on the tree. (Tom describes it in greater detail, here.)

We take the long-term time frame, and repeat the process year after year.

It’s the easiest way to accumulate millions of dollars in time for retirement—and to leave a lasting legacy for people to remember you by.

The Legacy Portfolio should be the cornerstone of your stock investment allocation.