Grab the money – because cash is king!

with Don Fraser
Fraser Farm Finance

There is even a song called ‘Grab the Money and run’, but I’m not suggesting the run bit of course.

In life we’re presented with all sorts of opportunity. Recognising positive opportunity is everything and the majority never see it, however some do. They take on some risk, become an ‘early-adopter’ and grab the opportunity.

This article, however, is more about deciding to grab the money when it avails itself. My first experience was as an ambitious graduate with 20 cattle on my block, which were mature and ready to sell in the early autumn. I was all set to cash them up there and then and grab the money. My best mate was in the stock business and said to hang onto them, put more weight on and I’d get more for them. I took his advice – I ran out of feed, as you do, the market softened, and I sold them for considerably less than I would have. Boner cows spring to mind. You can round up the empty and boner cows and sell them early. Grab the money and put it in your bank.

Selling land comes in this category too. You put your place on the market, and a ‘below your expectation’ offer comes in and you say: ‘No, I want more’. You should grab the money. I’ve been caught twice in this situation (I made the same mistake twice!)  I had an offer on my two 10 acre blocks when I was unconditional on my dairy farm. I messed around, asked for more, lost the deal, sold the blocks nine months later for less – plus the bridging costs. Ouch! I should have grabbed the money. The second time was similar with an even worse outcome. Don’t do it – grab the money.

So, do you take a $1000 now or $1100 in 12 months’ time? Might be tempting, but my experience has been to grab the money and get it in the bank. The deal might fall over and you get nothing, who knows?

I was watching rugby the other night with a great friend. A penalty was awarded near the end of the game, which would have equalled the score. They elected to kick for touch in the hope of getting a converted try, which may have sealed a win. My friend said that was the right thing to do. I kept saying: ‘Take the penalty, equalise the score and then try to get more points’. ‘Take the money!’ I yelled when they did not score to equalise. Take the penalty, re-equalise and go after more points.

I’ve seen it in mediation many times when I’ve got a very reasonable settlement for my clients and I’ve suggested strongly that they take the settlement. Their lawyer advises to go the legal way to get more. Most fail and they end up far worse off. It is a bit like the first offer is the best offer, but this goes way beyond that. When there is a deal on the table, always leave a bit in it for the other fellow and grab the money.

Being able to make a decision and stick with your own gut feeling is a very important and we need to be careful not to be talked out of it by lawyers and accountants who are worrying about their ‘legal’ liability. If there is a deal there and you can live with it – grab the money!

Everything you read now says that the bull run is over. Interest rates are low, world economies have got the wobbles, house prices are falling in some countries and all the indicators are that a correction is probable. What do you do? Stay in shares, houses etc or do you reduce your exposure and grab the money? Cash is king. Never forget it. Grabbing the money and putting it in the bank gives you options. No money in the bank – no options.

Being in a strong cash position puts you in control and dare I say it, feeling better. Always focus down on getting the money in and stop fluffing around and going for the last dollar.

Disclaimer – These are the opinions of Don Fraser of Fraser Farm Finance. Any decisions made should not be based on this article alone and appropriate professional assistance should be sought. Don Fraser is principal of Fraser Farm Finance and a consultant to the farming industry. Contact him on 021 777 675. A disclosure document is available on request.


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