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Ask Erik: RAW! - Growing Profits: When the Sock Drawer is Full

Diversify your investments and protect your hydroponic growing profits. Diversify your investments and protect your hydroponic growing profits.

Q:

Pleased to say that growing has been tremendously successful for me, but I am not writing in to brag, lol. Early in my career I had a couple of good crops and just kept investing any gains back into expanding my grows or making them better.

Now I am looking to diversify how I put my profits to work for me, and quite frankly, putting my hard earned cash into the bank to collect low returns doesn’t appeal to me. On top of that, it looks like the whole financial establishment is swirling around the bowl, so that’s one more reason I don’t want to put my money there.

Since I will eventually run out of room in my sock drawer to keep my loot, what kinds of things have you heard of smart growers doing with their profits, and did it pay for them?

A:

Risk versus Reward

There are lots of people who appear leery about putting their hard earned money into conventional places like a savings account these days; and likely not without good reason. Of course, this depends where in the world you are in terms of the global economic picture.

It’s Gotta Flow, Yo.

As a professional grower, you understand the importance of cash flow, as serious expenses can seemingly jump out of nowhere, which you have undoubtedly experienced if you have been in the grow biz for any amount of time. This means it’s usually a good idea for growers to maintain a higher degree of liquidity in their investments versus conventional folks.

Keep it Liquid

What does that mean exactly? It means keeping your investment easily convertible back into cash, or having an investment that generates cash versus a business where you have to give customers credit or where it’s difficult to otherwise turn your initial investment back into cash for example.

A small cafe might be a good example, and you might be able to sell one of your businesses product from another - not bad! For example, if you grow lots of fresh greens in your growing enterprise you may have people lining up at your new cafe for the house salad because it’s the freshest and best priced in town. If you become your own best customer you have a real win-win situation. Opening a hydroponics store might be another option too, but that’s a real full time job.

Back to the Root of It

In the end, a lot of growers find that the best place to invest their money is back into where they earned it in the first place: their grows. Consider that the “extra” money you have is the result of growing, so obviously you are doing something very right. While it’s almost always a good idea to diversify as a form of financial risk management, anything else could prove to be a gamble for you.

Cheers, Erik Biksa

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Some investments aren’t as wise as others.
Last modified on Monday, 16 July 2012 15:29

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