The Harvest Season and Planting Financial Seeds

This time of year is associated with the harvest in the Midwest. Traditionally, most of the crops would have already been reaped and the farming families would be stocked up and ready for winter. Their yield was determined by the decisions they made in the spring and summer—what crops they planted, how many, how they positioned them for optimal sunlight, how often they watered them, and on and on. Of course, some decisions were out of the farmers’ hands (they couldn’t very well control droughts or damaging storms), but they were not entirely helpless bystanders. As long as they nurtured their crops as best they could, they would likely have a decent harvest at the end of the season.

Farming is the perfect metaphor for financial investments (though I would argue that farming is more dicey!). If you plant financial “seeds” early and often, you’ll likely have a nice return when you’re ready to retire. As long as you keep a few basics in mind, anyone can be a “financial farmer.” Just remember to…

1. Diversify your crops

On family farms, it’s never a good idea to plant only corn or only potatoes. What if the potato bugs are especially bad? What if the deer go after your corn? It’s always wise to diversify, and the same goes for investing. If you keep a wide-reaching portfolio, you spread out your risk. If, for instance, you only invest in real estate, you may find yourself in the red if that particular market takes a hit (and we all know that can happen!).

Talk to your financial advisor about your portfolio options. Everyone’s situation is unique, so I won’t give any recommendations here, but most of my clients keep a blend of US and foreign stocks, bonds, and short-term investments. Some people invest in out-of-the-box programs, such as micro loans. Be sure to bring up diversification with your financial advisor.

2. Tend your crops

Sure, it’s a good idea to initiate investments, but your job does not end there. Just like farmers need to continue to water their crops, pull weeds, and take care of pests, so too do you need to tend to your investments.

That means continually funneling money into your portfolio, which you can usually do automatically. It may also mean shifting money, if the market or your personal circumstances have significantly changed. Some of these decisions are fine to make on your own (yes, keep feeding that 401K!), but for other major decisions, such as selling off a portion of your stocks, you may want to consult your financial advisor.

3. Let your crops grow

Farmers are patient. They know that seeds take time to grow, mature, and eventually bear fruit. They also know that some plants won’t make it, and others will thrive (Just because one strawberry plant dies, doesn’t mean you have to pull up the whole lot!).

Similarly, wise investors are patient. They know the market will have ups and downs. They know certain stocks will crash, but many others will thrive. Because of this foresight, these wise investors keep their money in the market for the long-term. They do not pull it out at every tiny sign of trouble.

Investors can learn a lot from the wisdom of farmers. Plant a diverse array of investments, keep an eye on them and supplement them often, and (above all!) leave them alone and let them mature. If you’d like any specific advice on diversifying investments or shifting your portfolio, please feel free to be in touch. It’s my goal to help you achieve abundance and self-wealth, no matter how close you are to harvest season!