Harvest Season Offers Leasons to Investors

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

investor.

Here are a few of these lessons to

consider:

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.

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

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.

Farmers face a variety

of risks, including bad weather and

fluctuating prices. They can help combat

both threats through diversification. For

instance, they can plant some crops that

are more drought-resistant than others, so

they won’t face complete ruin when the

rains don’t fall. As an investor, you should

also diversify; if you only owned one type

of financial asset, and that asset class took

a big hit, you could sustain large losses.

But spreading your dollars among an

array of investments — such as stocks,

bonds, cash and other vehicles — may

help reduce the effects of volatility on

your portfolio. (Be aware, though, that

diversification by itself can’t guarantee a

profit or protect against loss.)

Relatively few of us toil in the fields

to make our living. But by understanding

the challenges of those who farm the

land, we can learn some techniques that

may help us to nurture our investments.

This article was written by Edward

Jones for use by your local Edward

Jones Financial Advisor, Kristine Blaha at 37 Mill St Unionville, CT 06085. Please call for your appointment today 860-675-4922.