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Lessons from the Farm

Published by: Rus Hunt, CFP® Date: March 31, 2016

IMG_1481My wife and I have lived on a small farm in Louisville for the past 12 years. We have chickens, donkeys, fruit trees, berry bushes and a vegetable garden. There is always plenty to keep us busy but we love having fresh eggs, fruit and vegetables to eat and share with our family and friends. Food seems to taste better when some of your sweat was spent to produce it.

I grew up in the suburbs but spent a lot of time at my grandparent’s farm in the summer. I mainly experienced the harvesting and eating side of farming so the past few years have given me a more complete picture of what farming entails. I realize that if you are farming as a vocation there is a lot more at stake if your crop fails than if my apple trees don’t produce fruit. However, I believe the lessons learned, even on a small scale, are universal and applicable to many areas of life.

In my position as a financial advisor, I work with clients to help them reach their goals. For most people their primary financial goal is to accumulate enough money to have the option to stop working and live off of what they have saved. To work toward your goals a solid plan is essential. You need to select the right investments, continue to add contributions, adjust to changes, be patient and, finally, enjoy and share your harvest. Many of the steps in successfully growing crops or raising livestock have parallels in investing.

Can’t Just Scatter Seeds: I have learned that if I want to have a good chance for a successful harvest then I must do more than scatter seeds and hope for the best. I decide what crops and how much of each crop I want to harvest, how much space will be needed, when to plant, when to fertilize, when and how much to water, etc. If I don’t spend the time planning then I may end up with enough okra to feed an army or tomato plants killed because I planted them too early. To have any chance of reaching a goal to retire from work and not run out of money you have to spend some time deciding when you want to retire and what you want to do in retirement. Many of us just contribute some to our 401k and hope for the best.

Good Mix of Crops: Another lesson I learned is that some plants do not grow well when planted next to each other but will flourish when planted close to other plants. Tomatoes do not do well when planted next to corn or potatoes but do well with beans or onions. An investment account must have a mix of stocks and bonds that work together to generate returns and manage risk. Also, the investments should be spread across various asset classes such as international stock, emerging markets and real estate.

Consistent Maintenance: The most important thing for a garden is the gardener’s shadow. You have to be consistent in applying water, fertilizing, weeding, pruning and guarding against pests or disease. If you are not disciplined it is amazing how quickly weeds can grow, plants can wither or caterpillars can destroy a crop. If you plant award winning varieties of vegetables but do not feed them with water, fertilize and sunlight you will likely reap a small harvest or nothing at all. Reaching your financial goals may not require daily maintenance but the same principle of discipline still applies. The best investments will produce nothing if they are not fed with savings and adjusted periodically to stay consistent with your plan.

Sometimes a Storm Comes: Sometimes even if you do everything right a hailstorm rips through and destroys your crops or the stock market crashes. When that happens, plant a Fall garden, keep saving and stay disciplined to your financial plan. Do not be discouraged by temporary setbacks. A lot of plants and trees will sprout from their roots and be stronger in the long run. I have fig trees that have not produced fruit for two years because of harsh winters but this year they are already full of tiny figs. A drop in the price of your investments does not affect the amount of shares that you own so stay disciplined and allow time for the value to recover. Acting quickly when the market drops is like picking fruit before it ripens. Have patience or all you end up with is a bucket of sour apples.

Share Your Harvest: As I wrote at the start the best part of having a small farm is enjoying the rewards of your work. My wife and I love to share a meal of fresh, home-grown food with our children and grandchildren. It is also fun to give away jam, pickles and fresh vegetables to our friends and co-workers. Everybody loves zucchini, don’t they? The end result of solid financial planning along with consistent and disciplined savings is the reward of achieving your individual financial goals as well as being able to help meet the needs and wants of your family and others.

Rus Hunt, CFP® is a financial advisor with Rather & Kittrell. He is available at rhunt@rkcapital.com