It’s harvest time again. Of course, harvest season may not mean that much to you if you don’t work in agriculture. Nonetheless, you can learn a lot from those who do - especially in your role as an investor.
Here are a few of these lessons to consider:
• “Feed” your portfolio. Through the proper combination of fertilizers and irrigation, farmers seek to maximize the growth of their crops. And if you want to give your portfolio the opportunity to grow, you need to “feed” it with the right mix of investments. This generally means you’ll need to own a reasonable percentage of growth-oriented vehicles, such as stocks and stock-based securities. Keep in mind, though, that the value of these types of investments will fluctuate, sometimes sharply - and there’s no guarantee you won’t lose some or all of your principal.
• Be patient. Crops don’t grow overnight. Farmers know that they will put in countless hours of work before they see the fruits of their labors. And they know that, along the way, they will likely experience setbacks caused by a variety of issues: too much rain, too little rain, insect infestations - the list goes on and on. When you invest, you shouldn’t expect to “get rich quick” - and you can expect to experience obstacles in the form of bear markets, economic downturns, changes in legislation and so forth. Continuing to invest for the long term and focusing more on long-term results than short-term success can help you as you work toward your objectives.
• Respond to your investment “climate.” Farmers can’t control the weather, but they can respond to it. So, for example, when it’s been dry for a long time, they can boost their irrigation. As an investor, you can’t control the economic “climate,” but you can make adjustments. To illustrate: If all signs point to rising long-term interest rates, which typically have a negative effect on long-term bond prices, you may need to consider reducing your exposure, at least for a while, to these bonds.