Complexity, Simplified: Inter-sowing Seeds of Financial Wisdom
- 5 minutes
Simple. Elemental. Back to the basics. While the vision is different for everyone, many will conjure up images of nature’s lush, green landscapes. Especially for those of us in the Midwest, scenes from a farmer’s life paint an idyllic vignette: working the land, seeing the literal fruits of one’s labor. Yet things aren’t always as they seem: on the whole, farming was—and still is—a difficult existence. Most times, it’s only the savvy and well-supported that do more than subsist.
On the other hand, when we think of financial planning, simple isn’t an adjective we’d rush to use. Could it be though, that we just need to revisit our definitions? For while today’s financial world is generally touted as being the playground of the wealthy and privileged—filled with industry pundits and their hard-to-decipher jargon—its roots run deep, stemming right back to our agrarian past. Complex ideas can, and often do, originate simply. So let’s learn how accumulated life experience, when compounded over generations, can be a source of exceptional strength. Let’s draw comparisons and gather in some practical and surprisingly relevant returns. We’ll dig deep, learn some fundamental principles, and see what we can glean.
Slow, Stalwart and Steadied
Whether we’re talking about learning the financial ropes, or clearing fields of rocks and debris, in the beginning, you’ve got to get down ’n’ dirty. And at first, financial planning—much like farming—is often tough, slow-going, and laborious. Like the small seeds that farmers pray will yield, initial investments are cared for, tended to, nurtured. And if a crop just doesn’t work out as planned? Strength comes in knowing that it’s time to change course; flexibility is evident in the way that’s handled. And it’s this unsung prep work that in the end, contributes to a fine harvest. In so many ways, your first years of ‘planting’ and tending to investments are the most crucial, as even the smallest of these can reap huge rewards down the line.
Yet, even before those beginning phases, ‘testing’ your baseline is vital. A farmer would never expend valuable time, energy and assets before knowing where his soil both excels, and falls short in vital nutrients. And so it is with investing; only after an honest analysis can a portfolio be optimized for growth. Here’s where leaning on combined decades of experience and having regular, meaningful communication with an expert can help. You can learn how to amp up your financial soil’s potency, making it more fertile, more able to grow wealth. And make no mistake: the time you take to prepare your foundation will most always determine future success.
And we’re not just talking about tomorrow, but tomorrow’s tomorrow, and on down the line—you’ll always be cultivating and fortifying. This is day-in, day-out, forever. But that could be a lot to expect from someone who has a family, a career, a whole life to care for. And that’s why help is always at the ready. Because the time will come when extra hands are a welcome relief. A giant in the financial world offers his candid thoughts on the matter:
“You don’t need to be an expert in order to achieve satisfactory investment returns. But if you aren’t, you must recognize your limitations.” “It’s vital...that we recognize the perimeter of our 'circle of competence' and stay well inside of it.” — Warren Buffett
Now, there’s no shame in admitting that we need help to do better, go further. Because ultimately, you’re focused on becoming adept at whatever it is that you do best. Still, there’s a difference between discretion and incapacity. With this in mind, we might venture outside of our “circle of competence,” so long as we step well inside the circle of an expert.
A Virtuous Asset
Here’s a tough one, but a key lesson to learn. Keeping up with the neighbors—or the day-to-day fluctuations in crop values—won’t do a bit of good for the farmer’s yield. His time is far better spent focusing on the crops, and trying to maximize growing potential. Because a level-headed, focused approach will come only when media static and daily stats are seen for the distracting noise that they are. Even a backyard gardener knows that if a plant bears fruit in 70 days, it simply can’t be made to produce sooner. So allow time for your financial seeds to properly grow, mature, and yield. Conditions have to be just right for any crop—or investment—to flourish. And the coalescence of forces that allow for and promote that sort of growth won’t happen by chance.
So here’s a word to the wise: Fluctuating markets are no place for 'pie in the sky’ ideals. Hoping to strike it rich right off, and year after year is not just unrealistic—it could actually be a dangerous, poisonous mindset. If you do face a loss, overconfidence can easily fuel careless decisions. A gain could delude thinking even further. So keep things simple. Besides, the thankless initial struggle will be long forgotten as profits accumulate. But instead of focusing on the end product, why not just learn how to enjoy the growth process? Gain from each step taken, and when the fruit is ready, it will be all the sweeter.
“Ignore the chatter, keep your costs minimal, and invest in stocks as you would in a farm.” — Warren Buffett
So hang in there, the harvest will be worth it! Patience is far more than a virtue in this case—it can actually be a quantifiable asset. Because in the end, you’re looking to create a legacy that can testify to your hard work and determination. You’re thinking long-term, and that kind of sustained growth takes time.
Soil enriched, investments made, now it could be tempting to fall into a ‘set and forget’ mentality. But if one of many possible ‘disasters’ struck, would you sit idly by, hoping that things right themselves? We’re betting you wouldn’t go that route. At the same time, being overly preoccupied won’t help your cause either. In the end, neither response will encourage the right sort of growth. And that’s because it’s a Goldilocks sort of thing: there’s a ‘just right’ balance to be found, and it comes with continual learning, and an objective eye—something that can be hard to achieve when it’s your own future that’s at stake.
But the experienced farmer—and investor—knows that despite his best intentions, unforeseen events will wreak havoc. To do more than just ‘make it’ requires deep commitment, and protection against the odds. Not only can markets fluctuate wildly, but companies you’ve invested in can suddenly fail, or a serious financial reversal could strike. And truth be told, most of us, even after years of planning and planting, aren’t going to reach expert status. But here’s where a forward-thinking investor will focus energies on reinvention, rebalancing, recalculation. It’s at this point that drawing on available resources is not just a smart choice, but a distinct advantage, even a must. For while financial planning and the principles we’ve explored can seem to be simple, the time comes when they’re best applied in the hands of an expert.
Much like the weather, both market volatility and times of calm are next to impossible to accurately predict. Also like the weather, financial markets do have a natural rhythm that begets change and growth, over time. And just as countless almanacs draw from a rich, well-fortified base of data, market trends can be useful when making financial decisions. Because it’s not so much about predicting, as it is applying accumulated knowledge.
So while we know that spring is the time for cultivation and enrichment, summer brings growth, and the harvest soon follows, fall and winter aren’t always the dormant period we might expect. In reality, there’s always work to be done—whether it’s preparing for next season, or putting up this year’s produce. Slow periods or market downturns aren’t the time to ignore our investments. Instead, use this time to shift attention to reevaluation, and tweaking long-term plans.
As you evaluate your portfolio, it could come clear that too much risk is tied up in just a few investments. And here’s where a savvy investor will use diversification to their benefit. That way, risk is spread around, and if you lose something, you’re not losing everything. So build your storm shelter before the winds pick up, and have a cushion of savings put away so you’ll have extra ‘seeds’ to plant anew. And when your trusty advisor feels the need to give a warning, consider it seriously. After all, they’re on your team.
We’ve all heard this piece of homespun wisdom: ‘If something’s worth doing, it’s worth doing right.’ And really, there aren’t many things that could be more vital to ‘do right’ than investment management and general financial planning. The impact on you and your family’s future is huge. And just as protecting and providing for the ones we love has always been top priority, there will always be merit in a flexible, long-term approach.
So when it comes to financial decision making, the focus should be on what’s really important: ignoring transient trends, honing in on the ideal growing conditions, strengthening against loss and fortifying for continued growth. Let’s also work at building our ‘community,’ staying connected, engaged, ready and willing to lean on others. And while the focus is on growing your wealth, we can also make the most of your precious time, taking advantage of every ‘season’ to add to the harvest. So we encourage you to invest in the process, and find joy in growth. We’re hoping you’ll see your endeavors as “a lifelong learning experience and a grand adventure”—one you can share with us, come what may.