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10 Big Investing Lessons from Farming

I, along with my daughter Kavya, attended a workshop on kitchen farming last Sunday.

The idea of the Workshop was to teach simple ways to grow your own vegetables and fruits in your backyard, terrace, or balcony…and in a completely organic, non-toxic way.

The Workshop was organized by Green Souls, a volunteer driven setup that grows organic vegetables and fruits for children suffering from cancer.

This was my first brush with soil after almost 25 years. The last time I had patiently felt the earth beneath my feet was when I was almost Kavya’s age.

So it felt great going back to the roots, literally.

Anyways, the reason I am sharing this with you is because while learning to grow my own food, I realized there are several lessons that an investor can learn from farming.

Here are ten worth mentioning…

1. Start early
As we grow, our minds get conditioned to look at life in certain ways…and it’s difficult for us (and others) to change our worldviews.

So if you have been conditioned from the start to think that farming is dirty business, or investing is risky, or speculation is fun, you will live your life continuing to believe the stuff.

This is the reason I took Kavya along with me to the Workshop. She turned out to be one of the few attentive listeners to what our coach was teaching us.


As an investor, it’s important to start out early to give your money a lot many years to compound.

As you start earning, first pay off any high-cost debt, then buy medical and term insurance and save for an emergency…and then start investing your money.

But please start early.

2. First, learn the rules
Farming, while seeming easy, requires some understanding of the right process to do it.

You must know how to prepare the soil for a good harvest, use the right kind of seeds, and the right amount of temperature and moisture required for a plant’s growth.

In all, it’s a learner’s game. If you play it without knowing the rules, you may end up with dead plants.


This is also true of investing. Instead of forecasting “Sensex is going to 25,000!” or “This stock is a sure shot multibagger!”, it’s better to spend time learning and then practicing the simple investing rules that will help you a lifetime.

Most people learn the rules the other way. They want to score a century in the very first outing, get out on a duck, then blame the world for their losses, and sometimes take home bitter lessons from their mistakes.

It doesn’t work that way. It never has.

You first need to learn the investing rules, and also how to mind your behaviour. Then practice what you have learnt.

Of course, you will still make mistakes…but these will be few and less painful than if you go about without learning the rules.

3. Enjoy getting your hands dirty
A step in the process to grow organic food involves laying out cow-dung as a fertilizer. This is because cow-dung contains useful bacteria which increase the resistive power of the tree. The idea is to increase the organic growth of soil.

In the workshop, while some people were hesitant to get their hands dirty by touching cow-dung, Kavya was at the forefront laying out the stuff with her bare hands, and occasionally with a stick.


In investing, it’s important to get your hands dirty – by researching your investments well before you buy them, reading annual reports, calculating intrinsic value.

You must do this “dirty work” to increase the resistive power of your investments.

4. Prepare the soil
We were explained that a great way to help your vegetables and flowers thrive is by spending vastly more time “preparing the soil” and “selecting a viable seed”.


This is so true in investing as well. It’s important to prepare your mind and heart and select the right kind of investments if you don’t want to spend a lot of time getting stressed on how your investments are doing.

Almost 60-70% of the time you spend on your investments, perhaps even more, should be spent doing the research necessary to pick good investments in the first place.

After that, you don’t need to do much except weed and water. That is, just follow their progress and make sure their story hasn’t changed.

Nothing will ever grow without properly preparing the soil (your mind), and it’s unlikely that you’ll ever make a spectacular investment without thoroughly researching it first.

Take it easy. Take your time. There’s no rush.

As a legendary investor once remarked, “Buy in haste, repent at leisure.”

5. Simple does it
I was amazed to see an innovative, yet extremely simple way of watering the plants, drop by drop. This way, not only do you avoid spending a lot of time watering, you also avoid a lot of water wastage. See this…


This is where you, as an investor, can create a difference in your investing life.

Simplicity in investing can be achieved through ‘minimalism’.

Minimalism is basically an extension of simplicity – not only do you take things from complex to simple, but you try to get rid of anything that is unnecessary.

Here are three steps that I’ve personally taken in the pursuit of minimalism in my investing life. I believe these can be of help to you as well…

  1. Stop buying unnecessary stocks, funds, and other financial instruments (including unnecessary insurance policies). Buy only what you understand, and something that will not cause permanent loss of your capital.
  2. Get rid of the ‘obviously bad’ stuff from your portfolio, even if you have to take a loss. Get rid of at least 40-50% of your worst investments.
  3. Let go, emotionally.

That’s it!

The road to minimalism won’t be simple. But believe me, you will see something amazing there…not at the end of the road, but as you walk along.

6. Find your tribe
A part of process of growing plants organically is to lay out soil, dry leaves, cow dung, and dry coconut shells in layers like in a sandwich.

During the workshop, we managed to create a large bed in less than two hours just because we worked together. The best cooperation (as you can see below) was in the way we carried heavy baskets of soil.


In short, it was a tribe that worked together to achieve a given task successfully, and in a short time.

In investing as well, a tribe can help you immensely by sharing with you the investing lessons and mistakes each tribesman has learned over the years. This shortens the learning curve, and the tribe grows through sharing.

There’s a feeling of trust and abundance, two ingredients required for the building of a thriving community.

7. Water your plantings
As I wrote above, you don’t need to water your plants daily or they may die.

What you need to do instead is provide them the right amount of moisture to grow by providing them only a little amount of water at regular intervals.


This works very well in investing. You need to consistently invest if you want to compound your wealth over the long term. Small investment, month after month, is all you need for wealth creation.

Investing all at one go can be detrimental as you may end up buying stuff at high prices and then seeing them go down the drain if you had chosen a bad investment.

So buying in small chunks and diversifying a bit is a sound strategy.

8. Have patience
Investing is like watching your plants grow.

It’s boring, but that’s the way to compound you money over time.


What is more, you need patience not just after making an investment, but also before making one.

Just look at the tennis ace Novak Djokovic. His advantage over other professionals isn’t his agility or stamina or even his sense of humour.

Instead, as scientists who study superfast athletes have found, the key to Djokovic’s success is his ability to wait just a few milliseconds longer than his opponents before hitting the ball.

That tiny delay is why most players don’t have a chance against him. Djokovic wins because he can procrastinate – at the speed of light.

Procrastinating, delaying, or pausing before an investment decision usually results in a wise decision (I have experienced it personally), as this gives you a chance to reflect upon what your gut is telling you.

And your gut, in most cases, will give you a better indication than your brain on whether the decision will turn out great or dud.

Life might be a race against time but it is enriched when we rise above our instincts and stop the clock to process and understand what we are doing and why.

A wise decision requires reflection, and reflection requires a pause.

Then, once you make a decision, have patience to see the fruits.

Impatience is the number one enemy for any investor and patience is possibly the greatest virtue an investor can have.

As Buffett once said, “Lethargy, bordering on sloth, should remain the cornerstone of an investment style.”

This is the biggest investing lesson that farming can teach you.

9. As you sow, so you reap
This goes without much explanation. You can’t expect a cactus seed to flower into a rose plant.

In the same way, you must never expect a bad business, or a good business bought expensive, to earn you good returns even in the long term.

That’s why it’s so important to plant the right seed and identify the right business to invest in. This is why you must always try to remain inside your circle of competence – businesses that are simple and those you understand.

10. Enjoy your little fruits
Near the end of the Workshop, we were given the task of using our learning to make small pots to grow our plants – pots that don’t utilise much water and are available cheap.

So we made pots using unused plastic bottles, and then we all posed with our creations.

It felt like an achievement of sorts, especially for my little Kavya. Her smile says it all.


In investing, it’s also important that you celebrate your little successes that are the creation of your sound investing process.

These small successes provide validity to your investment philosophy, give you an emotional uplift, and help build faith in your efforts.

So these must be celebrated.

Do it. You deserve it.

Whatsay?

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About the Author

Vishal Khandelwal is the founder of Safal Niveshak. He works with small investors to help them become smart and independent in their stock market investing decisions. He is a SEBI registered Research Analyst. Connect with Vishal on Twitter.

Comments

  1. Excellent analogy.
    Truthful as well as Easy and simple
    These articles can straightaway go into text books.

  2. Very nice article as always!

  3. Indeed simple and straight. In fact in almost all disciplines those who are at the peak will be able to say the factors of success in very simple words.
    Given your myriad activities I am sure you are indeed living a minimalistic but hugely satisfying life. Of course to each his own definition of ‘satisfying life’.

  4. It’s amazing Vishal how you simplify investing by using real life analogies.

    I have never seen any financial blogger helping his readers in the way you do, and without any self interest. Thank you for the same!

    I am not an active investor but I am surely benefiting tremendously from your way of living and enjoying life to its fullest. Thanks for being a guiding light! Cheers!

  5. R.K.Chandrashekar says:

    Vishal
    The analogy is apt and brilliant. Not only that, you have sown the seed” your wonderful daughter” which will blossom and grow into a mighty flower. Our best wishes and blessings are with you and your family always.

  6. Good one. This reminds me of a book called ‘Sprout’ where Gardening was related to Selling. You have done some thing similar. Simple & meaningful. Keep contributing similar stuff

  7. Nice articulation and wonderful article. I am an NRI and farming is my favorite subject as I am working in the field combining technical and commerical operations related to farming. Unfortunately our country do not allow NRIs to buy an agri land and I do not inherit any agri land as we are not from farmer family.

    Coming to the point, green farming in India is percieved as next revolution to cater to billion plus population in India and am not sure of ratios between green farming area vs. conventional farming area in our country. While we can draw parallels between any field (farming, sports, entertainment, projects, education) to investing, the fact of the matter is much of these info remains superficial or limited to basic awareness. I have done evaluation of 10 farming case studies ranging from marginal farmer who owns very limited to land to large owners of land.

    The balance sheet of the case studies really depress me that ROCE (Return on Capital Employed) is more often negative or near zero or meagre. Worse, if some one thinking of buying agri land with a hope to reap profits from farming, they seem to be not viable. He/She would never ever be able raise the funds from VCs, Investors or Market. There are millions of reasons but primarily many variables effecting the profitability of farmer is not in his hands such as cost of seeds and fertilizer, availability of power and labour, weather and finally produce. One can not bring any ‘certainity’ factor into any stage of the farming cycle.

    In nutshell, farming be it conventional or green should be seen as ‘Service’ rather than business or investing model. Drawing investment lessons from ‘Service model’ is like carrying the kitchen knife for forest hunting.

  8. Akhilesh Pathak says:

    It is an art to make things as simple as the air you breathe, and there are very few people who can do this. I am extremely happy to find your blog as I was searching for Prof. Bakshi. Your simplicity, depth of thoughts and passion for changing the lives of others by sharing the knowledge for free is an act that world can emulate. Your Facebook profile’s cover pic is an apt description of you as a person “Be the change you want to see in the world”.

    Being an avid follower of an egalitarian world philosophy and great fan of investing legends like Graham, Warren Buffet, Charlie Munger, John Bogle and Phillip Fisher, trying my bit to come out of the rat race and do something meaningful in life. My life’s guiding principle has been very close to “5. Best advice ever received” mentioned in “ About Me” section of Safal Niveshak.

    Hope your investment wisdom and real life philosophy will be a beacon to guide numerous investors/individuals to become prudent and live a purposeful life 🙂

  9. Vishal, its been 2 months since i came across ur blog. All its articles are well written and simple yet effective. I am a housewife and incidently do a bit of both balcony gardening and investing. Often i too tend to draw parallels between the two.Besides the ones u have mentioned above, let mesuggest some of mine. 1.The need to take timely decisions i.e. to prune ,sow ,harvest on time., impatience and u get immature fruits and delay may lead to dried wilted ones.2.the ongoing process of learning is appicable to both.As in the share market so is the case with gardening u keep enriching your knowledge every single day.

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