Home Forums Hunting & Shooting Hunter's Campfire 401K or cows

Do a trade-off and evaluate the potential results:

2 cows will be worth ? in 2 years or whenever you sell them. Put the money in an S&P 500 index fund and assume 6% return over the same period. Which is higher?

Regardless, when you sell the cows, be sure to put it back into the 401k.

probably the best thoughts on this.

Assumption is the mother of all *uckups. What planet are you living on where you'll get a 6% rate of return on stocks or bonds, other than Euro PIIGS sovereigns over the next two years?

In constant 2000 FRN$'s the real rate of return for stocks has been negative for the last 12 years. Sure, there have been some bear market ralley's, all induced by Fed money printing, we just had one; but overall we're in a secular bear for equities and about to enter one for bonds. 6%? Not bloody likely.

well right now bonds are kicking ass since the market is down. ours are averaging 5.5%

assuming you got the grass and feed to carry a cow for a year , and a conservative 85% calf crop........

the 1500 dollar cow will return you maybe 800 bucks a head at current calf prices......alot better than 5 or 6 %...of course there is a little work involved there , as well as mineral expense , vet , fuel , and such


don't forget the cows are 5 year depreciable assets for income tax purposes ...so the tax issue is likely a moot point

Think this old boy has been raising and selling cows for many years. Already owns the land, just sold off what cows he had in the dry years.

Absolutely correct; the past decade has experienced a ROE of 0.6% in the 12 years between 2000 and 2012. However, it has seen a 20% rate of return in the bull market 18 years between 1982 and 2000. It does take a long term horizon, but depending on one's age , they may be able to ride-it-out and get higher returns. I should have said that in the previous posting. (see: http://caldwellorkin.com/?page_id=301 )

In my own case, I've received a 8% return on my broadly diversified investments over the past year and a 21% return in the years between 1999 and 2012 through low cost mutual funds. I think 6% is reasonable over the next 8 years. And, I am from planet Earth!

Everyone keeps saying, "Well, atleast you will have food". How many freaking cows are you going to eat? What are you going to do when you overstock your pastures, wipe out all your forage and have a bunch of cows and nothing else. All it takes is one drought and all you have is a bunch of worthless cows that you need to supplement with high priced hay. If you are trying to make real money with cattle, that is a full time endeavor. There are enough weekend warriors trying to make a dollar taking a trailer full of heifers to market. There are much better ways to make some money.

It has always been true that a 6% return will, "draw money from the moon", it is unrealistic to expect that good of an inflation adjusted return on any investment unless you are also injecting some sweat equity.

Can you borrow against the 401k and loan yourself the money? My plan offers 5 yr loans for whatever at a fixed rate of prime plus 1%, or 4.25% today.

Cows are like gold these days - both priced high. But either one will be worth more in the very near future, when both the dollar and the stock market take a plunge. Buy what you can with what remains of the $1,500. after taxes, if you can't buy heifers buy calves.

Edit: Didn't know the OP already knew cows. Forget what I said then.

Thanks Wtxj, what bothers me now is in May we barely got any rain. usually June isn't a rainy month either. Think were in for what we had last year. Just feelin' kinda' shakey about the coming years stock market .I know cows and not the Stock market. If I lose a cow to johnson grass that's Gods way of tellin' me to pay better attention, If I lose $40,000 in paper stock that's his way of tellin' me I'm a dumbass.

Take half, buy one cow rebuild money, buy another. Beef is up this year.

Beef cattle market is predicted to peak in 2013 then begin the 7 year cycle towards the bottom.

Personally I would not be buying a bunch of cows right now on the high end of the market.


I guess if you had extra grass and cash maybe buy some light steers and run them this Summer and hope the market holds or goes up. It's flattened out this Spring so maybe it'll take a little jump towards Fall.


My wife and I each have a 401K, it's money that doesn't even exist(IMO) but I guess we'll see what it does in the longterm.

It's tough. I have a good amount in my 401k. I am thinking about reducing it from the 5% I currently withhold and moving it back down to the 3% matched by my employer. Then holding the difference back and buying long storage foods and commodities to trade. I think it is about a 50-50 chance within the next 5 years we will have a collapse of the market. I am not certain we will have a argentinian super inflation but we will have some serious inflation. I don't think it will be on the scale of Greece or Argentina.

Just because we have the production capacity of goods and services to service our own country but it will be a good couple years for us to re-equalize to a more national based economy away from the global centric one we have now. Which may be a good thing in the very long run 10-20 years but will be a pretty bad deal in the short term.

I wish I had the land to raise some cattle or better yet goats.
They can eat anything and breed at a much better rate along with being tasty. Maybe throw a few sheep in there for clothing. My Mother has a spinning wheel and can knit and weave cloth and I am sure I can figure that out in short order. I have skills to trade. I am an I.T. Administrator with good hardware level skills along with very good mechanical and electrical repair and maintenance understanding. So hopefully I will be better off than some.

People need to keep in mind though that the "land you have" unless it is paid of will be useless to you in the case of a collapse. If you don't have an ability to pay the payment the banks will care less if we are in a depression. Some rich guy (there will still be some there always is) will decide he wants it and you will be SOL.

The best thing you can do is to take any money you have left over every month and add it to your mortgage payment. Or better yet make bi-Weekly payments on your mortgage. i.e 60% payment every 2 weeks. You would be shocked to find out how much faster you will pay it off. Paying bi-weekly payments adding 10% to each payment will pay you off up to 10 years faster on a 30 year mortgage. so if you have only 12 years left doing that will be even better you may pay it of in 7-9 years. Depending on your interest rate and size of the loan.

This is exactly what we are doing. It should reduce our 30 year loan to about 15 years.

Well maybe yes and maybe no. You can borrow on most 401K's then its a loan to yourself but I'd say its still a bad thing. There would be no IRS penalties in this case however.

Hay's gonna be cheap now, beef ain't.

Twins?