Where do you put your profits?

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Drose

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Just like the headline says. What do you put your cattle profits in to? What has been the most effective money you have spent? For the longest time I put mine in a low cost index fund and that proved to be a solid strategy. Now even the stock market seems top heavy and not a very good value. I always set aside a small portion to reinvest back in to the farm but for the most part I try to use the majority of any profit to diversify outside of cattle.
 
Yeah most people around me are equity builders and not profit producers. They run their farm like a start up business and pile all the money back in to the farm. Not a bad idea as long as you're not buying anything that depreciates.
 
Yeah most people around me are equity builders and not profit producers. They run their farm like a start up business and pile all the money back in to the farm. Not a bad idea as long as you're not buying anything that depreciates.
That's been my approach. It's like my savings account.

So far i have used beef profits and a few calves a year to cash flow hay/feed and equipment maintenance operating costs. Growing the herd along the way.
 
Low cost S&P 500 index fund is very safe and very successful over the long term as long as a person is disciplined enough to not cash out in a big long down market.
 
We invest the majority of the money back into the cattle or buying land. We do try our best to buy things that will provide some sort of return or savings. The last several years we've paid off allot of loans while cattle have been high. I don't know if improvements to land or facilities will ever end though.
 
Its...... rolling. You sell and then sink it into feed and gates etc. We don't make money, we improve the farm. LoL!
The value of a farm is often overlooked. We do an annual balance sheet as part of our operating loan renewal.

I suspect many people don't often reevaluate the value of a farm. Every few years, check what it would sell for.

We've grown our direct market business considerably. It can be depressing in terms of cash flow and bank balance. Once in awhile, I do a balance sheet just to keep my spirits up.
 
Beck when I had more cattle, and my children were still living at home, I'd take at least some of the profit every summer and rent a house in Port Mansfield, at the same time as some friends with children about the same age as mine.

I did, and do, consider it money well spent.
We work for the farm plenty. It should work for us as well. Good job!
 
We invest the majority of the money back into the cattle or buying land. We do try our best to buy things that will provide some sort of return or savings. The last several years we've paid off allot of loans while cattle have been high. I don't know if improvements to land or facilities will ever end though.
Most improvements to facilities are ones that improve safety and efficiency. I sell equipment. Most often people wonder why they didn't do the improvement sooner. I hear quality of life and family not yelling at each other as a big benefit as well ;-}

Improvements to the land we've seen pay within 5 years. Usually the first year. Most of ours have been in the regenerative grazing realm.
 
I need to get water to the back of the farm. That's probably going to be my next investment. As of right now only have water on the front half. Really makes the intensive graze all but impossible back there.
 
I hate buying equipment, but we have done without for the 10 years we have owned this place while we worked on interior fences, pipelines, water tanks and reseeding and old CRP field to a better dryland mix. After my wife had to feed cows in 27* below weather last January on the open station tractor she was all in on one with 4WD and a cab. Added a portable corral this summer because most of our lease pastures don't have much for facilities to work or ship cattle. Then replaced the old SxS that was always broke down with a brand spanking new one. The last construction project is going to be a new wind break/calf and blizzard shelter that should be done in a couple weeks. Hoping to get a trailer mounted post pounder next year and then we are done adding equipment for a while. Next project is rehabbing a 160-acre old CRP pasture if I can find a no-till drill to rent - don't really want to own one. Then the profits are going to investments or living expenses.
 
All income goes into a checking account. It goes out "first come first serve ". When it builds up some gets transferred to a money market account. When it gets low it comes back out of the money market account. When the money market account gets low, a transfer is made from an IRA.

Simple cash flow.
 
In general, I'd try to invest in more cattle, and/or have access to more land, before anything else, if/when I have something left over to work with. I do try to put out a little seed once in awhile. If I have more cattle, that might mean I will need more free-standing panels to make a larger corral.
 
We use it to pay down debt and use less of the operating loan. This last year I used some to buy a flake feeder which makes winter feeding quicker, easier, and a whole lot safer. This year I had to up date the balance sheet for the operating loan. Wow!!! Especially property values. Where was this kind of net worth 30 years ago when I could have really used it?
Back before I retired I operated at a loss on the cattle by purchasing assets of long tern use and value. Was able to write them off against my 9 to 5 income. Now I have them to use and they will last me the rest of my life.
 
With the cattle side, the cattle have to pay for things like equipment, cow trailer, minerals, and a replacement if needed. The hay buys tractors and equipment. The horses buys tack, a LQ trailer, RC or tow behind roping dummies, etc. Anything left over, if any, is what we call profit. Any profit is used for fun. For toys. Bass boat, couple of personal watercraft, a 4 wheeler and a Ranger, couple of kayaks, bird dogs and beagles, and guns. This is over the years, not all at one time.
 

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