A Retirement Investment in Nursery Plants.

Could nursery plants be a real retirement investment? Well first let’s look at a typical investment someone might make in retirement. Someone might take $1,000, deposit it in a bank, in let’s say a Certificate of Deposit. You might expect to make 2-3% on that investment depending on where interest rates are at the moment. A reminder that rates can go up and down many times over your years of retirement. A 2-3% return would give you a cash return of around $20-30.00 per $1,000 dollars, per  year. After 2-5 years your $1,000 investment might give you a total return of $40-150.00.

Our Video on how to Make a Retirement Income Growing Nursery Plants

 

Someone a little more open to some risk might take the same $1,000 and invest in a fund or a group of stocks and bonds. The returns on a reasonably stable stock and bond funds might return 6-8% per year, on average, over long periods of time. In an optimum situation, $1,000 at 8% for 5 years would yield you $400. Not bad! This type of investing is called Passive Investing as you don’t have an active roll in it other than selecting when to buy or sell it. You might even choose to hire a financial advisor which for many is a very good decision. The downside is you have a fixed nest egg, returns can vary and over time you might run your nest egg down trying to maintain a decent lifestyle.

Maybe you have been a good investor?

Let’s take someone who was a good saver and has their money well positioned in some stock/bond funds and managed by a financial advisor. The current advice is you can safely take 3-4% of your savings out each year and not deplete your savings. If you were careful enough and able to save $500,000 or even $1,000,000 during your life time, what could you have available to live on? Simple enough, 4% of $500,000 or $1,000,000 is $20,000 and $40,000. Combined with your Social Security payments of $18-36,000 you might be in for a great retirement income. Great if you did but many have not!

So, lets look at some what-ifs of a retirement situation

• What if you could not save $500,000, $1,000,000 or even $2,000,000 for retirement?
• What if your Social Security payments will be low?
• Maybe you don’t care to downsize your home or lifestyle.
• Perhaps you don’t want to move to another state – we didn’t!
• What if you want to stay active, get some exercise and make some extra money?
• Many people want to delay or should delay withdrawing from their savings so it can continue to grow.

Why growing plants is a perfect retirement plan for us

We started really thinking about our retirement investments and lifestyle long before we needed to. We investigated buying a property out of state, looked at where our savings would be in our mid-60s, and started creating a list of what we hoped to achieve. Some of our criteria was:

• Stay in our current home – we love our home, the property, its history and the location.
• We wanted to stay near our children, our Church, and our friends.
• We wanted to stay active – with good health on our side we wanted to keep up an active lifestyle.
• Remaining productive, we just could not see ourselves picking up shells on the beach.
• Running a business we enjoy – we have run a business before and enjoy it.
• Working together – unlike some couples we work well together.

Is growing nursery plants a good retirement investment?

Now let’s look at starting a backyard plant nursery as a retirement investment. What is your investment? To grow plants you will need starter plants, something to grow them in, some water, potting soil, fertilizer and time. We talk about these costs elsewhere so for now let’s say simply, each plant and everything else totals up to about $4.00 each. Thus for your $1,000 investment you can add your labor, water and sunshine and produce 250 plants. $1,000/$4.= 250!

Let’s say you intend to sell all these plants when they reach a certain size. We grow an 18-22” Spruce tree to over 36” in less than 3 years so let’s just use 3 years. One tree will sell for at least $30.00 each. You must plan to lose about 5% of the trees and have a couple other miscellaneous but small costs. In the end you should have around 230 trees to sell at $30.00 or a total of $6,900! Wow! Subtracting your investment of $1,000 you have a profit of $5,900. Which is almost a 600% total gain or 200% gain per year over 3 years. Nice return!

Plants as a retirement investment do require some time and work.

Growing plants is an active investment (You have to provide some work) so you should expect to receive somewhat higher returns for your efforts. In fact you should track your investment in time and make sure you are making enough of a return. With returns of 500-800% over 3-5 years and a fairly small time investment this should really not be a problem.

You should be honest about the amount of work needed to grow plants. This can of course vary based on the plants you grow and the size you plan to grow them too. You should also not be shy about getting some help when planting and selling so you don’t have to exhaust yourself. Get the  kids involved and pay for some help. We find it takes 2-4 people to plant 6-800 plants in a weekend. You can spread tasks like this out and plant over more days but it is good to get some help.

Creating an annual cash flow from plants.

This is fairly simple math and there is no point making it complicated. You can calculate your costs.

• Cost of small plants, liners, seedlings, seeds or cuttings. Yes this can be as little as $-0- while we average $2.00
• Cost of your potting mix – We find we are spending about $0.50 for a #3 pot per plant.
• Containers add up and we budget $1.25 for a nice quality cloth grow bag with handles. You can spend much less.
• Water, fertilizer and miscellaneous expenses might be $0.25 per plant.
• Our bottom line budget is $4.00 per plant.

Now what can you sell your plants for to realize your retirement investment?

• We grow #1 container plants with an expected sale price of $10-20.00
• Plants in a #2 container with an expected sale price of $15-25.00
• We grow the majority of our spruce trees in a #3 container with a target price of $30-35.00
• About 20% of our Spruces and other trees are in #5 containers, these will take longer but should sell for $60.00

The longer we go the more the numbers tend to be an average plant sale price of $30.00 with an average cost of $4.00. This can of course vary depending on the size of plants you grow, how long you grow them, what plants you grow and even where you live. In many parts of the country $30.00 is very high but not for us in suburban NJ.

Our initial goal was to plant 1,000 trees per year, spend $4.00 on each and sell them for an average of $35.00. This then becomes the simple math of 1,000 plants X $35.00 – Less your costs of 1,000 X $4.00 – this leaves you with a $31,000 profit. For 2 people this is about 4-6 days of work to plant each year – less if you get some helpers. Then you have some work fertilizing watering, weeding and finally selling.

We order plants, pots, dirt and can plant all these in 2-4 days with a couple helpers. We are currently planting at least 2,000 plants per year if not 3,000 so we are spending a good 10-14 days per year planting and generally get some help. Selling them in 2 to 3 years takes a little time too, plan to spend part of each weekend for about 6-8 weeks during selling season. After our first fall and spring planting we decided we could easily plant more than 1,000 plants per year. The first full year of planting we planted 3,500 trees, plants, and shrubs. We also start at least 1,000 cuttings each year now of which 65-90% of them may become healthy plants.

Can plants also be an appreciating retirement investment?

Now that you might be looking at your plants as an income stream in retirement let’s see what it does for your balance sheet or net worth. Your net worth or personal balance sheet is simply all your assets less all your liabilities. Simplified maybe you own your home, a car, have some money in savings, IRA or 401k. Maybe this totals $1.2 million dollars in value. On the liability side maybe you have a mortgage, a car loan and some credit card debt all totaling $200,000.

Subtracting your total debts of $200,000 from your $1.2 million of assets leaves you with a net or net worth of $1,000,000. Very good and far better than most people reaching retirement age but you will still need cash flow! You also need some stability and a good hedge against inflation.  According to Intuit the median net worth of Americans aged 55-64 is $213,150. The average net worth is $1,176,520 however it is very skewed by the wealthiest 1-2% of people with a very large net worth. These numbers tell us people need more income and a growing investment base even in retirement.

With plants your retirement investment is always growing.

Plants are growing each year and become more valuable over time. Even if you have enough income in your early retirement that can change. You should always hope for the best but plan for the worst. Health, inflation, stock market crashes and other life events can derail your plans – diversifying and have a plan B (And C and D) is the best plan.  Continuing to grow your nest egg in retirement is wise and can be done by growing plants.

Avoid spending your nest egg

One of the best parts about growing plants to make some retirement income is not drawing down on your retirement nest egg. If you just defer withdrawing money from your savings for 5 years it can continue to grow. For example if you have $500,000 saved and had planned to withdraw 3-4% of it per year you would have $15-20,000 in income per year. If all is well that $500,000 should also retain all its value as it should be returning more than 3-4% per year, hopefully around 6-8%.

Now instead you don’t draw from your nest egg because you are selling plants instead. After a year your nest egg making a 6% return is now worth $530,000. Year 2 it grows to $561,800, year 3 $595,508, year 4 $631,238 and at the end of 5 years it’s now worth $669,112! Look at what you have accomplished, you created an income that kept you from taking from your nest egg. That increased your nest egg substantially and you earned your way through 5 years of retirement. Now you can scale back your plant nursery and draw $20-26,000 per year from your larger nest egg. Well done and who says you need to totally stop at age 70, 75 or 80. Just scale back a little, sell smaller plants or get some helpers.

For the more aggressive we offer the following tips to really increase your retirement investment value and income from trees and plants.

• Start long before you retire. 3-5 years is best so you have a large stock of plants built up.
• Start selling before you retire to build up sufficient funds so you can buy more plants and supplies.
• Plant more plants in the early years, some also in larger containers so you diversify your sizes and have larger plants growing for future years.
• Get good at propagating plants by rooting cuttings and dividing. Keeping some larger plants for cutting stock can keep you in free baby plants for ever!

Plants can grow your net worth as they offer a 2-500% increase in your retirement investment each year. Planting now, planting every year and reinvesting some of your early profits will give you an excellent return. The value of all your plants will be growing continuously and thus can help you leave your nest egg to grow and provide a mechanism for growth for your net worth.  Plants you grow certainly can increase your net worth, income and add stability to your retirement. Simply put, plants can be outside in your yard growing even while your sleep. You keep planting them, they keep growing and over time you have a pardon the pun, an evergreen investment.