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One-Sentence Financial Advice


Sometimes I encounter challenges in my Road Warrior travels. Recently, canceled flights moved a group of us toward another form of transportation, reminiscent of the movie Planes, Trains and Automobiles. During the ride between cities, everyone in the vehicle shared their occupation, family information, etc. When it was my turn, I wondered, should I admit I am an economist, or should the line be that I am a traveling serial killer? Well, of course, in the company of strangers, I divulged that I was an economist by occupation. Then the group challenged me to be a one-sentence financial and economic advisor. Here is the advice I shared.


What are your best pieces of financial advice?

  • Pay yourself first and never see the money. If your business is profitable, you should aspire to invest 10-20% of your net income toward your financial goals. That could be stocks or mutual funds, but in the case of agriculture, land, livestock, machinery and income-generating assets also apply. If you had an unusually good year, up the ante and invest one-third of your net income.
  • Know your costs. Whether it is a farm or ranch business, or family budget, it is imperative to know your costs. It is impossible to meet your financial goals without knowing costs. Be careful of the category called “other” or “miscellaneous.” Keep this category less than 5% of expenses, or the money will just disappear.
  • Diversification is key. Nearly 7% of the growth of wealth in the long run is through allocation, not timing of the market. Stocks were a hit 20 years ago, while land, gold and oil are popular today. Know what you are investing in and be careful of hot markets.

Well, this is the end of the journey, as we are pulling in to the Teepee, i.e. Denver international Airport, at 4:45 a.m.


Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at [email protected]

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