Never spend your seed

Never spend your seed

Wise old farmers have long had a saying: Don’t eat your seed corn. In simple terms, it means that every seed that comes through your hands has the potential to either be eaten or planted for next year’s harvest. You need to make sure that your farm always has enough seed corn to replant the fields on your land so you enjoy another harvest next year. If you eat your seed corn, you won’t have anything to put in the ground and you lose the farm. Your family starves. You are broke.

The “don’t eat your seed corn” truism is often applied to finance in the old saw, “never spend your principal”. Both concepts underscore a fundamental truth: When you expend something, you are not only giving up the item itself, but all that the item could have produced in the future. In the case of money, that means when you spend $1.00, you are not giving up $1.00 You are giving up all of the dividends, interest, and rents that dollar could have produced from now until your death. For example, to an 18 year old high school graduate who lived until he or she was 80, and earned the same rate of return the stock market has earned, on average, for the past couple of centuries, $1.00 is really more than $368.  By spending the dollar today, the newly minted adult is spending $1.00 plus $367.00 in future dollars.

3 Steps to Apply the Don’t Eat Your Seed Corn Rule to Your Own Investment Portfolio

There are three easy ways you can use the farmer’s rule to improve your own finances and investment portfolio.

Identify the Specific Assets and Dollar Amounts That Are Reserved As Seed Corn

In my family, we call this our “permanent capital” reserve. Think of it as an endowment at a university or charitable foundation. This is money that should never be spent, under any circumstances, even if it means you have to sell your car, your house, your artwork, and get a second job. If you need to live off your investments, you are only allowed to spend the dividend income or other profits thrown off by the seed corn. The seed corn itself is sacred. Spending even a penny of it would be sacrilege.

Calculate How Much You Are Going to Add To Your Seed Corn Each Year to Combat Inflation and Taxes

The value of money falls over time in most societies because elected officials print more currency with each passing year. To combat this inflation, you often need to grow your portfolio value so that you are generating more dollars, euros, yen, pound sterling, or whichever other currency you require in order to purchase the same quantity of milk, cheese, bread, eggs, heat, clothing, gasoline, and entertainment you could in prior years. To guard against inflation, focus on purchasing power. It is all about purchasing power.

Determine the End Game Plan for Your Seed Corn

Do you want to spend all of your money before you die, eating the seed corn you have accumulated in the final five or ten years of life? Do you want to leave all of your seed corn to charity or family members?  What, in other words, is the end game? You cannot live forever so you need to be very specific regarding your plans for what you have acquired during your lifetime. Ultimately, it’s your money.  You can’t take it with you so you need to dispose of it, or use it, in a way that reflects your own desires and convictions. For me, that vehicle is the Kennon & Green Foundation. For you it might be something like charitable remainders trust.

A Final Tip to Protecting Your Seed Corn

One way you can avoid the temptation to dip into your seed corn is to use what I call a central collection and disbursement account. Doing so results in the dividends, interest, profits, rents, licensing income, or other gains you see being deposited into a bank account dedicated to disbursements, not the brokerage accounts or retirement trusts that hold your investments. The end result is that you only deposit money into the structures that hold your stocks, bonds, real estate, or mutual funds, never taking money out of them. It erects a barrier between you and your principal. This approach isn’t foolproof, if you are committed to doing something unwise, you are probably going to find a way to do it, you can slow the process down a bit, giving you time to think.

Always remember this rule: Don’t sacrifice what you want for what you want right now. Keep that inscribed on your heart and protecting your seed corn should be much easier.

About lisachristiansencompanies

A U T H O R • I N N O V A T O R • E X P E R T Dr. Lisa Christiansen is one of the most sought-after motivational speakers, life coaches, and business consultants worldwide, building an impeccable record of client satisfaction in the process. A best selling author as well, Dr. Lisa Christiansen has written such inspirational titles as My Name Is Lisa; The Two Millimeter Shift; White Sheep, Blue Skies, Green Grass; 101 Great Ways To Enhance Your Career; and others, in which she sheds light on some of the biggest questions of self-empowerment and fulfillment. Among her most recent publications, Dr. Lisa Christiansen contributed to the book 100 Ways to Enhance Your Career, which features wisdom from other well-known figures in the self-help world, including Jack Canfield, John Gray, and Richard Carlson. In 100 Ways to Enhance Your Career, Dr. Lisa Christiansen shares a step-by-step process for increasing job satisfaction, gaining more from one’s career, building wealth, and taking control of one’s destiny. Aside from her numerous books, Dr. Lisa Christiansen hosts a wide variety of seminars and retreats, where she teaches her students the secret to unlocking their inner potential and living their dreams. Some of the popular events held by Dr. Lisa Christiansen include Mastering Your Wealth, Claim Your Future, and Design Your Destiny, all of which feature her intensive coaching and unique strategies of personal transformation. Her website has a wealth of additional information on her conferences, retreats, books, and other endeavors. Join the millions of people who have already revolutionized the quality of their lives. “You already know how to survive global changes in the economy, environment and political arena, now it's time to thrive and prosper at a level beyond what you ever thought was possible,” Christiansen said. “My seminar is about seizing the power within today. Press Summary: Creator of extraordinary lives, Lisa Christiansen has served as an advisor to leaders around the world for the last two decades. A recognized authority on the psychology of leadership, organizational turnaround and peak performance, Lisa has consulted Olympic athletes, world renowned musicians, Fortune 500 CEOs, psychologists, and world-class entertainers. Lisa’s strategies for achieving lasting results and fulfillment are regarded as the platinum standard in the coaching industry. Lisa captured the attention of heads of state and the U.S. Army. Christiansen has impacted the lives of millions of people from 30 countries. Lisa has been honored by Cambridge Society of Who’s Who as one of the Top Business Intellectuals in the World. Lisa has helped millions of people create extraordinary lives globally. Her expertise and guidance has enriched the lives of icons such as pop superstar Kelly Clarkson, Olympian Dara Torres, and superstar Patrick Dempsey.

Posted on September 22, 2012, in Wealth Creation and tagged , , , , , , , , , , , , , , , , , , . Bookmark the permalink. 1 Comment.

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