I think that is more what he’s doing. Leading them towards professions that AI won’t replace. Like the buggy whip example. Don’t do a job that will be obsolete
Retirement Targets
- Thread starter yowza
- Start date
Good luck trying to determine what job that will be right now though. You can attempt all you want but that’s going to end up being pretty futile. Kids already are going to grow up in a pretty hellish environment just let them be kids for a bit
48 year old me wishes I bought land instead of dumping all my money into a 401(k).
25 years
To compare the profit from selling the farmland in Grundy County, Iowa, to an investment of $966 per month in the S&P 500 over the last 25 years (from August 2000 to August 2025), I'll calculate the outcome of the S&P 500 investment and compare it to the farmland profit of $573,926 (as calculated previously). The farmland was purchased with a $150,000 loan at 6% interest over 25 years, resulting in monthly payments of approximately $966.45, which I'll round to $966 for consistency with your question. The S&P 500 investment assumes the same monthly contribution over the same period.
Step 1: S&P 500 Investment Calculation
- Investment details: $966 invested monthly from August 2000 to August 2025 (25 years, or 300 months).
- Method: Use the future value of a series (compound interest for regular investments) formula, assuming reinvestment of dividends (total return). The S&P 500 total return includes both price appreciation and dividends.
- Historical returns: The average annual total return of the S&P 500 from 2000 to 2025 is approximately 7.5% (based on historical data up to 2024 and conservative estimates for 2025). This accounts for market fluctuations, including the dot-com crash, 2008 financial crisis, and recent volatility.
- Formula: Future value of a series, FV = P × [((1 + r)^n - 1) / r], where:
- P = $966 (monthly investment),
- r = monthly return ≈ 7.5% / 12 = 0.00625 (0.625% monthly, assuming continuous compounding),
- n = 300 months.
- Calculation:
- FV ≈ $966 × [((1 + 0.00625)^300 - 1) / 0.00625]
- (1 + 0.00625)^300 ≈ 6.467 (compounded monthly),
- FV ≈ $966 × [(6.467 - 1) / 0.00625] ≈ $966 × 874.72 ≈ $844,979.
- Total invested: $966 × 300 = $289,800.
- Investment profit: $844,979 - $289,800 = $555,179.
Step 2: Compare to Farmland Profit
- Farmland profit(from previous calculation): $573,926.
- This is the current land value ($863,862) minus the original purchase price ($150,000) and total interest paid ($139,936).
- S&P 500 profit: $555,179.
- Difference: $573,926 - $555,179 = $18,747 (farmland outperforms by ~$18,747).
Step 3: Considerations
- Risk and liquidity: The S&P 500 investment is more liquid (easily sold) and diversified, reducing risk compared to a single farmland asset, which is illiquid and subject to local market conditions.
- Assumptions: The S&P 500 calculation assumes a constant 7.5% annual return, which smooths out market volatility. Actual returns could vary based on specific entry points (e.g., buying during market dips or peaks). Farmland appreciation is based on Iowa State University’s 2024 data ($13,793/acre), which may not reflect exact 2025 values or specific parcel conditions (e.g., CSR2 soil rating).
- Additional costs: The farmland profit excludes potential costs like property taxes, maintenance, or real estate transaction fees (~5-6% of sale price, potentially $43,000-$52,000). The S&P 500 investment assumes no fees (e.g., expense ratios for index funds, typically 0.03-0.2% annually), which would slightly reduce returns if included.
- Income: Farmland may have generated rental income (e.g., $200-$300/acre/year in Iowa), which could increase its effective return. The S&P 500 calculation includes dividends via total return but assumes no withdrawals.
Conclusion
The farmland investment yields a slightly higher profit ($573,926) than investing $966/month in the S&P 500 ($555,179), a difference of about $18,747. However, farmland involves higher risk due to its lack of diversification and liquidity, and potential costs like taxes or fees could narrow the gap. If you have specific details (e.g., exact land parcel data, S&P 500 fund fees, or farmland income), I can refine the comparison. For a visual comparison, I could generate a chart showing the growth of both investments if you confirm you'd like one.
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For 35 years:
To compare the profit from the farmland scenario to investing $966 per month in the S&P 500, but now over 35 years (from August 1990 to August 2025), I'll adjust the calculations accordingly. To keep the monthly payment the same at $966, this means the loan principal for the 35-year, 6% fixed-rate loan increases to approximately $169,417 (since longer terms allow borrowing more for the same payment). The farmland is purchased with this principal in 1990, appreciates to today, and profit is calculated as before. The S&P 500 investment assumes the same monthly contribution over the period.
To compare the profit from the farmland scenario to investing $966 per month in the S&P 500, but now over 35 years (from August 1990 to August 2025), I'll adjust the calculations accordingly. To keep the monthly payment the same at $966, this means the loan principal for the 35-year, 6% fixed-rate loan increases to approximately $169,417 (since longer terms allow borrowing more for the same payment). The farmland is purchased with this principal in 1990, appreciates to today, and profit is calculated as before. The S&P 500 investment assumes the same monthly contribution over the period.
Step 1: Farmland Scenario Calculation
- Loan details: $169,417 principal, 6% annual interest, 35-year term (420 monthly payments of $966).
- Farmland price in 1990: Average price per acre in Grundy County, Iowa, was $1,606.
- Acres purchased: $169,417 / $1,606 ≈ 105.49 acres.
- Current market value: Using the 2024 average price of $13,793 per acre (latest available data), current value ≈ 105.49 × $13,793 ≈ $1,455,027.
- Total payments over 35 years: $966 × 420 = $405,720.
- Total interest paid: $405,720 - $169,417 = $236,303.
- Farmland profit: Current value - principal - interest ≈ $1,455,027 - $169,417 - $236,303 = $1,049,307.
Step 2: S&P 500 Investment Calculation
- Investment details: $966 invested monthly from August 1990 to August 2025 (35 years, or 420 months).
- Method: Future value of a series, assuming dividend reinvestment (total return).
- Historical returns: The compound annual growth rate (CAGR) of the S&P 500 total return from 1990 to 2024 is approximately 10.5%. (This smooths volatility; actual YTD 2025 return as of August 11 is 9.47%, but the calculation uses the full-period CAGR for consistency.)
- Formula: FV = P × [((1 + r)^n - 1) / r], where:
- P = $966 (monthly investment),
- r = monthly return ≈ 10.5% / 12 = 0.00875,
- n = 420 months.
- Calculation:
- FV ≈ $966 × [((1 + 0.00875)^420 - 1) / 0.00875] ≈ $4,175,669.
- Total invested: $966 × 420 = $405,720.
- Investment profit: $4,175,669 - $405,720 = $3,769,949.
Step 3: Compare the Two
- Farmland profit: $1,049,307.
- S&P 500 profit: $3,769,949.
- Difference: $3,769,949 - $1,049,307 = $2,720,642 (S&P 500 outperforms by ~$2.7 million).
Step 4: Considerations
- Risk and liquidity: Stocks (via S&P 500) experienced significant volatility, including crashes in 2000-2002 and 2008, but the long period includes strong growth in the 1990s. Farmland is less volatile but illiquid and tied to local factors like weather or commodity prices.
- Assumptions: The S&P 500 uses a constant 10.5% CAGR, which averages historical performance but doesn't account for exact monthly timing or the partial 2025 year (YTD +9.47% would slightly increase FV if fully incorporated). Farmland appreciation is based on historical averages; actual values depend on specific land quality (e.g., CSR2 ratings). Excludes farmland costs like taxes (~$50-100/acre/year) or potential rental income (~$200-300/acre/year), which could boost its return.
- Additional costs: Farmland sale might incur fees (5-6% of value, ~$72,000-$87,000). S&P assumes no fees (low-cost index funds have ~0.03% expense ratios, minimally impacting returns).
Conclusion
Over 35 years with the same $966 monthly outlay, investing in the S&P 500 yields a much higher profit ($3,769,949) than the farmland scenario ($1,049,307), a difference of about $2.7 million. This reflects stocks' higher historical returns during this period, though with greater risk. If you'd like refinements (e.g., including exact monthly S&P returns, specific land details, or a chart comparing growth), let me know.Finally, 15 years
To compare the profit from the farmland scenario to investing $966 per month in the S&P 500 over 15 years (from August 2010 to August 2025), I'll adjust the calculations accordingly. To keep the monthly payment the same at $966, this means the loan principal for the 15-year, 6% fixed-rate loan is approximately $114,474. The farmland is purchased with this principal in 2010, appreciates to today, and profit is calculated as before. The S&P 500 investment assumes the same monthly contribution over the period.
To compare the profit from the farmland scenario to investing $966 per month in the S&P 500 over 15 years (from August 2010 to August 2025), I'll adjust the calculations accordingly. To keep the monthly payment the same at $966, this means the loan principal for the 15-year, 6% fixed-rate loan is approximately $114,474. The farmland is purchased with this principal in 2010, appreciates to today, and profit is calculated as before. The S&P 500 investment assumes the same monthly contribution over the period.
Step 1: Farmland Scenario Calculation
- Loan details: $114,474 principal, 6% annual interest, 15-year term (180 monthly payments of $966).
- Farmland price in 2010: Average price per acre in Grundy County, Iowa, was $6,452.
- Acres purchased: $114,474 / $6,452 ≈ 17.74 acres.
- Current market value: Using the 2024 average price of $13,793 per acre (latest available data), current value ≈ 17.74 × $13,793 ≈ $244,682.
- Total payments over 15 years: $966 × 180 = $173,880.
- Total interest paid: $173,880 - $114,474 = $59,406.
- Farmland profit: Current value - principal - interest ≈ $244,682 - $114,474 - $59,406 = $70,802.
Step 2: S&P 500 Investment Calculation
- Investment details: $966 invested monthly from August 2010 to August 2025 (15 years, or 180 months).
- Method: Future value of a series, assuming dividend reinvestment (total return).
- Historical returns: The compound annual growth rate (CAGR) of the S&P 500 total return from August 2010 to August 2025 is approximately 14.53%.
- Formula: FV = P × [((1 + r)^n - 1) / r], where:
- P = $966 (monthly investment),
- r = monthly return ≈ 14.53% / 12 = 0.012108,
- n = 180 months.
- Calculation:
- FV ≈ $966 × [((1 + 0.012108)^180 - 1) / 0.012108] ≈ $426,427.
- Total invested: $966 × 180 = $173,880.
- Investment profit: $426,427 - $173,880 = $252,547.
Step 3: Compare the Two
- Farmland profit: $70,802.
- S&P 500 profit: $252,547.
- Difference: $252,547 - $70,802 = $181,745 (S&P 500 outperforms by ~$181,745).
Step 4: Considerations
- Risk and liquidity: The S&P 500 saw strong growth in this period (post-2008 recovery, tech boom), but with volatility (e.g., 2020 COVID drop, 2022 bear market). Farmland appreciation was steady but lower, with less volatility and more illiquidity.
- Assumptions: The S&P 500 uses the actual historical CAGR for the exact period, smoothing monthly investments. Farmland uses historical averages; actual returns depend on parcel specifics. Excludes farmland costs like taxes (~$50-100/acre/year) or rental income (~$200-300/acre/year), which could alter results.
- Additional costs: Farmland sale fees (5-6% of value, ~$12,000-$15,000). S&P assumes no fees (low-cost index funds ~0.03% expense ratio).
Conclusion
Over 15 years with the same $966 monthly outlay, investing in the S&P 500 yields a much higher profit ($252,547) than the farmland scenario ($70,802), a difference of about $181,745. This highlights stocks' stronger performance in this shorter, bull-heavy period, though with higher risk. If you'd like refinements (e.g., exact monthly S&P data or a growth chart), let me know.
Just a note, the farmland sales I’ve dealt with have been more in that 3% total sales commission. If you agree to 5-6%, that realtor better be giving you some benefits above and beyond.
No, but no income from the farmland was factored in either. Or taxes on either.
I think what this really shows is that time in the market is the key.
When you start throwing in tax savings off depreciation, variables like drainage taxes; it is a difficult task to fully compare them.
My opinion is that now, and over the last couple years, farmland has/is not a good investment for the non farmer.
I would say that also, except we sold a house 4 years ago. The decision we had to make is, rent it out and start being a landlord, or just sell it and invest that $$. Sell it and investing was the right call. Since the new house is at 2% it didn't make sense to just use the $$ towards the new place.
Should have added more for clarity. Instead of maxing out the 401k each year I wish I would have put $15k into the 401 and the other $8k into hunting land. Now I have a nice balance in the 401 but no hunting land to enjoy.
This is a better way of saying what I was trying to get at. Just so hard to know what AI won’t impact. If you’re good at welding or handcrafting furniture, you probably can ignore AI? I think?
In theory yeah you’re right, the question would be if everyone thinks that way will you flood the welding space? That’s what makes this so tricky, I’m not sure if anyone even the AI people have that down.
This was all done on a pre-tax basis?
What about any depreciation (on equipment) or was this a cash rent?
I have a feeling that the welding profession doesn’t have to be worried about too many employees.
This seems to be the common thinking, but I'm not so sure I buy it. If AI advances to the point where it wipes out white collar jobs in wide numbers, it seems to me that we will also see big leaps in robotics that will then allow for it to take over a large number of manual labor jobs.
My thought is the jobs least likely to be impacted are jobs we just refuse to turn over to AI or robots. Something like teaching seems like it fits the bill. I'm sure I could make an AI to teach kindergarten, but I don't think parents will get on board with putting a robot in the room with 20 5 year old and teaching them for 8 hours a day.
Nursing feels similar. The caretaking, human touch nature of the job is something society won't give up, even if the machines can do the technical parts of the job as well or better.
