There are many analogies we can use when comparing finance and horticulture. “Investment now will be rewarded in the future”. “Create a diversified/bio diversified portfolio that performs in different eventualities”. “Revisit and reassess performance and rebalance/replant if required”. Selecting the right combination of plants is akin to combining a stock selection with in a portfolio for the best performance. “Hedges”! Both my garden and portfolio contain plenty of these.
Simply put, both gardening and finance are about looking ahead and planning for different outcomes.
There is a subtle difference in the assessment of return of one verse the other. Gardening mistakes can be costly and disappointing, likewise with finance. But gains are not assessed in the same way. In the garden, you might see a glorious display of annual bedding plants flower for one season, which then die back and must be bought again in the following year. You would not expect do this with any financial investment, instead you expect the performance of perennials in your financial portfolio that deliver year after year. Anything that offers to provide consistent performance has a different risk return profile. Assessing the cashflow and risk of the initial outlay against the rewards or returns is important for both gardening and financial decision making. Modelling a cashflow to return analysis over a fixed time horizon, is the basis of any investment analysis.
This correlation between gardening and finance is not just a textbook analogy. Investment in a garden will deliver gains that can be monetised. A great garden, enhances the curb appeal of a property increases the value by 5% or more, depending on the location and quality of the outdoor space. Being able to assess the valuation of property or portfolios is an essential skill, often left to a financial advisor. Many times, I hear people say they are not buying property yet “because the market might fall”, so will rent for longer. Their assessment is based on a principal value analysis only and misses the key tenants for fundamental valuation, which again, is cashflow driven.
I think most people would start to advance learning more about finance or horticulture either online or in books, magazines or even on the television. My experience tells me that classrooms, both virtual and in person are the best learning experience. Join us to in a virtual classroom to learn more about the fundamental applications of finance, which you can then go away and apply to many areas of your life, including but not limited to gardening!
