Financial Growth in Uncertain Times

Teresa Olson
By Teresa Olson October 31, 2017 11:55


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It’s no secret that these times are challenging.  The farm sector’s debt-to-income ratio is the highest it’s been in thirty years, and 2017 represents the 5th year in a row that farm solvency ratios have weakened, along with liquidity ratios and working capital which have declined to their weakest levels in 15 years.  The agricultural downturn has lead to deteriorating credit conditions and reports show that many banks have reduced the amount of funds available for financing.  These conditions are especially challenging for beginning, smaller and mid-sized farmers as they struggle to operate.

So how does one get ahead during these days of uncertainty?  Jim Gibbs and Dan Garner are both financial planners who stress first of all that farmers in the accumulation period of their careers should have at least six months cash flow to handle expenses before considering investing any money in areas outside of their business.  They also state that the current financial climate augments the following five key laws of wealth:

  • Diversify.  Farmers are often over weighted in taxable assets (cash, money market funds, CDs, other bank-type products) that generate low returns in a low-interest environment.
  • Form a plan and stick to it.  Abandoning your financial plan is the best way to lose money, so plan to invest only money that can stay invested through any down market period.
  • Get some good help.  All investors need help to prevent them from acting out of fear and greed, so a financial adviser can be extremely valuable (their clients outperform those without an adviser by 2-3% each year)
  • Don’t forecast.  It’s not profitable and rules-based approaches consistently beat this method.
  • Use your own scoreboard.  Measure success against your own needs as opposed to a market index and keep your eye on your own long-term goals.  This technique is called goals-based investing.

Daniel Crosby, author of The Laws of Wealth: Psychology and the Secret to Investing Success, lists a dozen big investment tips in his book.  Four stood out for me as “common sense” investing advice for everyone:

You don’t have to be rich to invest, but you have to invest to be rich.

Spend less than you make.  Always.

If you’re excited about an investment, it’s probably a bad idea.

A penny saved is more than a penny earned.

The bottom line is to make a commitment and stay the course.  You probably won’t become wealthy overnight, but eventually your efforts will reward you.

-Terry Olson, Titan Outlet Store Team



Teresa Olson
By Teresa Olson October 31, 2017 11:55
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