Hi folks my name is Justin Peacock. By way of background, I’m an owner at an independent, fee-only wealth management and financial planning firm in Northern Illinois. I spend my days helping clients make decisions on the issues that impact their financial futures – issues like saving for retirement, transitioning their business to the next generation, sending kids to college and stewarding their investments wisely.
So by now you may be asking yourself, “why is an investment guy writing an article for a farm business website?”
Simply put, I have a passion for helping farmers build a great relationship with their money. In the months ahead I hope to share some ideas that can help you make sound decisions to enjoy a full life.
One of the topics that has been on my mind lately is something called “concentration risk.” Concentration risk is the simple concept of having a large percentage of one’s overall wealth concentrated in one type of investment.
Traditionally, most farmers invest (and re-invest) the lion’s share of their dollars in farmland and other farm-related assets. On one hand, this is logical since these investments help generate the income that sustain a farmer’s quality of life. It’s similar to a manufacturing company owner building a new plant to increase production capacity.
While most farmers will likely always have the majority of their wealth in farm-related assets, at some point it also makes sense to explore other types of investments.
The recent pullback in corn and soybean prices is a reminder that no asset goes up 100% of the time.
Managing your concentration risk is something that won’t happen on its own. It takes a willful, consistent commitment to investing in a variety of assets such as non-Ag real estate, low-cost stock mutual funds and bonds.
Over the coming months, I look forward to sharing some practical ideas on how you can thoughtfully manage your concentration risk and build an all-weather investment strategy that can serve you well over the long-run.
Look at your personal balance sheet. What percentage is made up of farm-related assets? How does that percentage make you feel about your risk?
If this article has you thinking about your own concentration risk and would like to chat about it please feel free to contact me at [email protected].
Investments involve risk and past performance may not be indicative of future results. Balasa Dinverno Foltz LLC (BDF) investment and wealth management strategy recommendations may not be profitable, suitable or equal historical performance. BDF’s current written disclosure statement discussing advisory services and fees is available for review at www.BDFLLC.com or upon request.
Justin Peacock is an Owner at Balasa Dinverno Foltz llc (BDF) an independent, fee-only wealth management firm based near Chicago. He heads up BDF’s practice group dedicated to serving clients in the agriculture industry. In his role, he provides clients with conflict-free advice, comprehensive financial planning and ongoing portfolio management. Justin graduated from Illinois State University, earned an MBA from the Kellogg School of Management at Northwestern University and is a Certified Financial Planner® Professional. Outside of work, he enjoys serving on the board of his local church, and spending time with his wife and three children. Justin can be reached at [email protected].
The opinions of the author are not necessarily those of Farm Futures or Penton Agriculture.