SPECIAL REPORT: BUILDING A PORTFOLIO
Understanding capital and income Farmers need capital, plus income when they hang up their boots. Elaine Fisher spoke to retired farm finance specialist Don Fraser to find out more.
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etirement may seem a long way off for many farmers, but there’s no time like the present to begin preparing for it – and that preparation starts with understanding the difference between capital and income, says Don Fraser, retired farm finance specialist and former dairy farmer. “It’s vital not to mix the two up. Too often when farmers retire, they take the capital from the sale of the farm and spend it, ending up with nothing left to produce an income for their retirement.” Don says consensus among many of his colleagues, including former rural bankers, is that 80% of farmers are very poor at managing their finances after selling their farms. “Believe me you do not want to end up living on the pension and from your vegetable garden. I’ve seen too many people, not only retired farmers, having to do just that.” After 52 years involved in the rural sector, Don has retired and is living at Waihi Beach, where he’s actively involved in the community. He attended Lincoln College gaining Diplomas in Agriculture and Valuation and Farm Management; worked for the Rural Bank; is a registered valuer; was a dairy farmer and since the mid-1990s, ran his own company Fraser Farm Finance, helping farmers access finance and providing them with advice. “Over the decades I’ve seen some horrendous things happen to farmers, some outside of their control, but some which were not. It’s very hard to convince some farmers that the capital they have built up in their property from their life’s work, should not all be spent on a world holiday, new vehicles and a house or lifestyle block because too often, there’s nothing left to live on, especially if one of you has to go into care later in life.”
