Savings & On-Hand Cash

[Hilly]

@Hilly . What do you think are the best off farm investments?

Long term property or pension , short term, haven't found any have you ?

 

[DRC]

Long term property or pension , short term, haven't found any have you ?

No, that's why I was asking

 

[Hilly]

No, that's why I was asking

If their were lots of good short term investments we would all be rich beyond our wildest dreams lol

 

[farmerm]

Long term property or pension , short term, haven't found any have you ?

Probably best short term off farm investment is to get off the farm for a short term

 

[Hilly]

Probably best short term off farm investment is to get off the farm for a short term

Perhaps yes, we don`t have to work physically as hard as previous generations but by god the generation at the moment who are deriving a full time living and doing it well from farming are working harder in many more ways than any generation that went before them imho.

 

[farmerm]

Perhaps yes, we don`t have to work physically as hard as previous generations but by god the generation at the moment who are deriving a full time living and doing it well from farming are working harder in many more ways than any generation that went before them imho.

The phrase running faster to stand still comes to mind...

 

[Hilly]

The phrase running faster to stand still comes to mind...

Not sure about that , plenty successful farmers out their jsut the job more mental stress now than physical stress, machines have removed the back breaking but rules regs and bulls**t stress`s the mind more these days.

 

[Kiwi Pete]

Inflation puts me off keeping lots of dosh, i prefer having it invested in things that go up in value.

Good call
Investors tend to say "only amateurs park money in the bank" and there are some real growth areas to invest in outside the farm gate, as well as inside.

Many would make better money out of a grand's worth of minerals than a grand's worth of animals, for an example - but they don't see it that way.

I am backwards, completely backwards in my financial affairs so I can't really comment as a "proper farmer" but do appreciate what it must be like to be under the pump and farming full-time.
I grew up seeing what that did to people, and it wasn't all giggles and sh1!s in a downturn.

 

[Global ovine]

Its good to see such a thread as the business of farming is often neglected during seasonal challenges.
I know of no young farmers who were not fully committed to debt repayments in their first decade while having all the costs of set up and often babies etc. just to complicate matters.
Having gone through all that myself and having led plenty of young (and not so young too) through such periods I have relied on some basic principles:
@Tim W covered my point about building a cash reserve as soon as you can. My mantra was 20% of an average years turnover. Little difference.....chose your discipline.
Never let your annual interest payments exceed 26%, or you will get dragged into a cash vortex (this is relevant to NZ where farms are mostly owned.....therefore relates to mortgage and O/D interest payments).
Always separate farm expenditure from household expenditure by using separate bank accounts. One account not properly managed has been a constant theme of farm businesses in trouble.
Have a plan. Go out a decade and decide where financially you would like to be. Ask yourself if doing what you do now will get you to that point, if not what needs changing so you do. Write it down and try to meet the annual targets. If one product lets you down, work out what can be done to counter the deficit. The art of success is not just what happens, but what you changed to make it happen. The greatest changes are in thinking, not working.
Involve your spouse or others in your farm business direction decisions, it affects their lives too.
Mix with positive people, avoid whingers, good mental health is vital.

In any business, income is vanity, profit is sanity and cash is king. Too many people lose their most precious asset, their family, because cash and profit were never properly managed. Make a plan.

 

[Hilly]

Always bit coin, anyone doing it, according to Facebook jim Davidson made millions from 200 quid lol must be reeet .

 

[Hilly]

Its good to see such a thread as the business of farming is often neglected during seasonal challenges.
I know of no young farmers who were not fully committed to debt repayments in their first decade while having all the costs of set up and often babies etc. just to complicate matters.
Having gone through all that myself and having led plenty of young (and not so young too) through such periods I have relied on some basic principles:
@Tim W covered my point about building a cash reserve as soon as you can. My mantra was 20% of an average years turnover. Little difference.....chose your discipline.
Never let your annual interest payments exceed 26%, or you will get dragged into a cash vortex (this is relevant to NZ where farms are mostly owned.....therefore relates to mortgage and O/D interest payments).
Always separate farm expenditure from household expenditure by using separate bank accounts. One account not properly managed has been a constant theme of farm businesses in trouble.
Have a plan. Go out a decade and decide where financially you would like to be. Ask yourself if doing what you do now will get you to that point, if not what needs changing so you do. Write it down and try to meet the annual targets. If one product lets you down, work out what can be done to counter the deficit. The art of success is not just what happens, but what you changed to make it happen. The greatest changes are in thinking, not working.
Involve your spouse or others in your farm business direction decisions, it affects their lives too.
Mix with positive people, avoid whingers, good mental health is vital.

In any business, income is vanity, profit is sanity and cash is king. Too many people lose their most precious asset, their family, because cash and profit were never properly managed. Make a plan.

I agree all good ! no fear of me using interest rates of 26% ! i saw what 18% did in the 80`s, brutal

 

[warksfarmer]

Not looking for any extremely personal details, rather trying to get a feel for other peoples situations compared to my own.

I am guilty of pumping nearly all of my personal monies into farming - therefore leaving me with very little on-hand cash or savings at hand.

Granted I am only 25, but if I had an emergency and needed £10,000 for instance I would have to sell some stock.

I have a fair few assets etc., but I can honestly say that I have <£1000 on hand cash at the present time for to have fun with. Most of my full time wage goes to mortgages / loans / insurance etc.

I talk to people who think I am mad not having a large cash reserve to fall back on, and I talk to people who reckon that by pushing on I am doing the right thing...I am satisfied in knowing that if I needed some money all I need to do is sell something - but of course I never like selling stuff.

Feel free to comment, or it the above offends you - don't comment!

Possible issue getting money out of the business though regarding personal tax depending on the business setup?

 

[neilo]

Mix with positive people, avoid whingers,

Are you suggesting we avoid all livestock markets and TFF then?

 

[tommyurray]

Not looking for any extremely personal details, rather trying to get a feel for other peoples situations compared to my own.

I am guilty of pumping nearly all of my personal monies into farming - therefore leaving me with very little on-hand cash or savings at hand.

Granted I am only 25, but if I had an emergency and needed £10,000 for instance I would have to sell some stock.

I have a fair few assets etc., but I can honestly say that I have <£1000 on hand cash at the present time for to have fun with. Most of my full time wage goes to mortgages / loans / insurance etc.

I talk to people who think I am mad not having a large cash reserve to fall back on, and I talk to people who reckon that by pushing on I am doing the right thing...I am satisfied in knowing that if I needed some money all I need to do is sell something - but of course I never like selling stuff.

Feel free to comment, or it the above offends you - don't comment! [/QUOTE

Most on this site will spend most of their money on their business at your age spend it on things that give the best return
You mention a regular wage so you are not totally reliant on the farm,you have loans not credit card debt you pay insurance so are covered for some disasters.
Cash in the bank gets eaten by inflation, debt also gets eaten by inflation if you put your money into good assets or are making good profit margins you are far better off with debt than cash in the bank.
Whatever your goals are for goodness sake enjoy yourself you only get one chance at life, if you just put your head down and work hard you may find the end of the road before you have had a chance to enjoy what you gathered on your trip through life.
Money does not buy happiness
but it gets you a better quality unhappiness!

 

[The Agrarian]

When I was your age, I had recently taken on a fair whack of debt to upgrade plant and infrastructure on the farm. Well, it's not a lot by the sums some folks are spending, but it was a lot for me who had come out of University with little more than a few quid to my name. I threw everything I could at that loan as I went along to get it down, keeping nothing much for myself in the way of savings.

Now I'm 39, three kids, and my approach is saving as much out of the business every year as I can reasonably extract. I'm still spending on what i think needs it, for the health of the farm business, and as a self employed person I can still choose at any point in the future to make a donation to a larger farm investment, if necessary, that can't be paid out of a year's profit.

I don't have a target for savings and investment outside of the farm - only to keeping working on building it up.

 

[tommyurray]

Its good to see such a thread as the business of farming is often neglected during seasonal challenges.
I know of no young farmers who were not fully committed to debt repayments in their first decade while having all the costs of set up and often babies etc. just to complicate matters.
Having gone through all that myself and having led plenty of young (and not so young too) through such periods I have relied on some basic principles:
@Tim W covered my point about building a cash reserve as soon as you can. My mantra was 20% of an average years turnover. Little difference.....chose your discipline.
Never let your annual interest payments exceed 26%, or you will get dragged into a cash vortex (this is relevant to NZ where farms are mostly owned.....therefore relates to mortgage and O/D interest payments).
Always separate farm expenditure from household expenditure by using separate bank accounts. One account not properly managed has been a constant theme of farm businesses in trouble.
Have a plan. Go out a decade and decide where financially you would like to be. Ask yourself if doing what you do now will get you to that point, if not what needs changing so you do. Write it down and try to meet the annual targets. If one product lets you down, work out what can be done to counter the deficit. The art of success is not just what happens, but what you changed to make it happen. The greatest changes are in thinking, not working.
Involve your spouse or others in your farm business direction decisions, it affects their lives too.
Mix with positive people, avoid whingers, good mental health is vital.

In any business, income is vanity, profit is sanity and cash is king. Too many people lose their most precious asset, their family, because cash and profit were never properly managed. Make a plan.

Agree with almost everything you say except getting rid of the debt, used properly you can multiply your assets I also need it to motivate me to work (through fear of failure)as I get bored easily when everything runs smoothly and need new projects which I cannot afford without debt
Totally agree family comes first without them everything might as well be dust, think outside the box look at everything from different angles you will be amazed at what people have missed because they do things the way their father and grandfather did them opertunity is always there for those who look for it

 

[Global ovine]

I agree all good ! no fear of me using interest rates of 26% ! i saw what 18% did in the 80`s, brutal

Sorry , maybe I was not clear; interest payments totaling more than 26% of gross income, that's irrespective of the interest rate.

Agree with almost everything you say except getting rid of the debt, used properly you can multiply your assets I also need it to motivate me to work (through fear of failure)as I get bored easily when everything runs smoothly and need new projects which I cannot afford without debt
Totally agree family comes first without them everything might as well be dust, think outside the box look at everything from different angles you will be amazed at what people have missed because they do things the way their father and grandfather did them opertunity is always there for those who look for it

Nowhere have I written to get rid of debt.
I can quote numerous farmers including myself who deliberately kept their debt levels high, but their interest payments in the range of 15 - 23% of gross income, thereby opening up opportunities for expansion. Let me quote 3 actual examples from sheep farmers in NZ's deep south whom I am very familiar with:

• Farmer A leased a small farm and bought out his brothers to take over his late father's small farm. Over the following 30 years and with 3 sons busting themselves to go farming too they now run 59,000 sheep SU on highly developed hill country. https://www.odt.co.nz/rural-life/rural-people/different-paths-farming-success
  
• Farmer B farmed 250 acres of intensive but fragmented strong soils on the flat. He sold out to dairying and bought a large mixed cropping/finishing farm in a drier region. With his son now involved he doubled the area by buying two neighbours. They recently bought an extensive hill property. History now shows they have gone from 800 ewes to 18,000 sheep SU over about 40 years.
• In my own case I was lured out of sheep research to become a 30% equity partner in an enterprise with only 15% equity. Then we went through the traumatic restructuring of the NZ economy involving 6 years of treading water while interest rates were 23% at their highest to 16% at their lowest when old ewes were a cost to slaughter and prime lambs fetched under $20.00 each. We were then selling a lot of rams and our income rose proportionately, so we borrowed to the max and doubled the acreage and then ran 4,000 sheep SU all studs (fully recorded for ram breeding). I progressively bought out my partners, eventually selling when the dairy conversion demand peaked land values as my kids were established in their own professions and I took life in another direction. Debt has never scared me as it allowed wealth building that I could not have achieved in another industry, but its cost must be kept within limits.