I gave a keynote speech recently on off-farm investing, and one of the graziers who attended bailed me up at the end and politely said: "Ben, we're not risk takers at all; we are very, very conservative. How can we invest off-farm?"
Now I've heard this countless times before, and it still makes me smile. Is there even such as thing as a conservative farmer? By the very nature of the industry, whether you realise it or not, farmers take risks that would make even a professional bull fighter think twice.
To put hundreds of thousands of dollars worth of seed and fertiliser in the ground and hope it rains may seem like an unimaginable risk, even madness, to the average city slicker, but most farmers have an acute understanding of this risk, and live with it.
Understanding and experiencing risk leads us to being comfortable with it, and agriculture is perhaps the greatest example of how humans relate to risk.
Think about it. As kids we were all afraid of the dark. But when the lights were turned on and we can see what was or wasn't there, we were ok. And you may remember how nerve-racking it felt taking out your first loan to buy a home or a farm? I sure can, and it is fascinating to think how quickly you get comfortable with that debt.
Humans have a unique talent of adapting to risk, allowing us to decisively move forward on opportunities like taking on more debt to expand a farming operations, or building off-farm investments.
We all know that risk can be good, and bad - but in most cases risk facilitates progression. To move forward you need to get comfortable with risk, and ensure you have a clear understanding of the downsides of that particular risk, taking on the right risks, at the right time.
Get that balance right and you have the potential to shape a strong financial future, because as they say, with risk can come reward.
I have found that the best way to increase your comfort with the right risks is to have a well thought out and executed plan. A good financial plan when dealing with off-farm investing can help take some of the fear out of risk, and set you up for a world of opportunity.
- Ben is an authorised representative of Charter Financial Planning. This article offers general advice only. You should seek advice tailored to your particular circumstances before taking action.