By Bobby Spencer, Clay Cattle Company
With the U.S. economy still in recession and the stock market as jumpy as a school bus with no shocks, where can individual investors go to diversify and help stabilize better yields on their retirement accounts? The answer may be meandering alongside a country road…literally.
Investing in cattle – or put a little differently, food for a hungry nation – can help grow your tax-advantaged self-directed IRA.
What You Should Know
The greatest thing about cattle is they’re very simple. With a little care, good feed, and some grass, grain and water, they’ll gain from two to three pounds a day. You can literally watch your investment and potential profits grow.
To help you get a bit more comfortable with the idea of investing in cattle, here are three solid tips for the novice cattle investor:
Work with professionals. The cattle industry, although massive across America, is really a close knit bunch of great people who will welcome you into the industry and do everything possible to help. Their hopes are for you to enjoy the benefits and satisfaction of reaching your goals. That’s why they’ll freely offer sound advice and share their market knowledge. Additionally, investment dollars are needed in our industry from the custom background or feedlot to the ranching sector. You might be amazed at the long-term friendships you’ll create and the care you’ll receive.
IMPORTANT: Be sure to avoid any dealings with buyers or sellers who are not bonded for your protection, or ones who won’t provide a list of references for you to contact.
Always position yourself for profit. Some investors may listen to a market analyst who’s predicting a cattle shortage in six months. Although it’s sometimes easy to think your calves could make $100 a head if you only hang on and watch them grow, those in the front of our industry cover their inventory by using “put options” or insurance, knowing their input cost and taking profits at every turn. It’s better to secure an 8% to 10% return on investment and turn one set of cattle every 90 to 120 days than to hope for a home run and tie up your dollars too long only to ride a market that may be in decline.
IMPORTANT: Avoid changing your investment approach mid-stream. Always have a game plan and stick to your original goals. Many great cattlemen buy the same weight of calves and sell them in the 90- to 120-day range, after they gain 200 new pounds. Sticking to their market plan helps lock in and turn profits over and over, providing a greater opportunity for continued success.
Take pride in your investment. Let’s be honest. How much enjoyment can you get from a Mutual Fund? (Unless, of course, you just love reading the fine print of the Wall Street Journal.) Most investors don’t really understand what their money is doing or where it’s at. So keep a picture of your steers on your refrigerator. Tell your friends or co-workers to watch your cattle sell on television. Or show them the catalog or Internet site that’s marketing your investment. The pride of knowing you’re in control and creating a great U.S. product will be both interesting and exciting. Enjoy the ride!
IMPORTANT: Never leave anything to chance. Cattle markets move up and down daily. The investor who knows profits are locked in and inventory is covered will be ahead. This creates confidence by not having to worry about losing dollars.
The Advantages of Investing in Cattle
Investing in cattle offers many advantages, but the top three are growth, security and the fact that they’re a tangible asset. Here’s more on each:
Growth – Cattle have a wonderful advantage over a lot of investments, depending on the size when purchased, they’ll gain an average of 2 – 2 ½ pounds every day. And they work for you 24 hours a day, seven days a week. A 500-pound steer purchased May 1 will be a 700 pound steer on August 1, ready to sell to a feedlot.
Security – Cattle are a commodity that’s here to stay. Want proof? Stop and observe a fast food chain over the lunch hour in any part of the U.S. or see how tough it is to get into a great steak house for dinner on any weekend without a reservation.
Tangible Asset – Not only can you drive to a lot to see your investment, you can drive them down an alley, call them to the feed bunk and, best of all, sell them at any time. American markets are current daily with bids for this commodity.
Who Invests in Cattle?
The cattle industry enjoys investors from all walks of life but the investor who has a love for animals and gets pleasure in watching something grow may be the best personality type for investing in cattle.
These hardworking individuals have a passion for being part of an industry that rewards them with a wonderful feeling of satisfaction. Not only did they help create a product that will always be in demand, they’re taking part in feeding a hungry nation.
How to Get Started and Where to Get More Information
You can begin investing in cattle with most any investment amount. At Clay Cattle, we match like-minded investors together to take advantage of the best load lot pricing. We’ll even work with your financial advisors to ensure tax-favorable options.
Additionally, Clay Cattle is always here to help with expert insight and educational information. We have a network of great cattlemen to help you achieve goals, plus knowledgeable staff members who walk you through the process. Our management programs are designed to get you started correctly and keep you on the right path to ensure profit without market stress. For example, we find the right load of calves at a fair price, know your expenses on the investment (such as feed costs), place them at a reputable feed lot or ranch to assure proper care and handling, and finally market them at the right time to maximize profit. To start the process, all you have to do is contact us.
With the importance of educating newcomers, there are The Cattlemen’s Associations across the country that will welcome any novice investor. I attend the NCBA National Cattlemen’s Convention each year in January and highly recommend this great organization to anyone interested in cattle.
Do You Hear the Cattle Call?
If you want more control over your retirement savings, consider investing in cattle with a self-directed retirement account. Without a doubt, our country has the best cattle the world has to offer. The industry has quality genetics and condition with programs to help you achieve investment goals.
Remember, your retirement savings is one of your most important financial assets. So if you have a little agriculture somewhere in your heart, I encourage you to put at least part of your retirement dollars into cattle within the highly respected North American Cattle Business.
Bobby Spencer is a licensed investment advisor and has helped many with IRA retirement products and sound estate planning procedures to help individuals reach their goals.
His knowledge of the cattle industry has made him the go to person for those wishing to get creative.
All Self-Directed retirement dollars are placed with the industry’s leader in IRA Custodian accounts, Equity Trust Company, which has over 36 years of experience and over 160,000 clients world-wide.
Bobby Spencer can be reached at 712-644-2222 or 712-592-2180 or Spencers@loganet.net. Invest at ClayCattle.Com.