There are few moments in life when you get money without having to pay tax on it. Cash windfalls from First Communion and Confirmation are two of the big ones. What to do with this money is a multi-generational issue.

In my own case, I purchased a mountain bike with my Confirmation money. That mountain bike was a great investment as it brought me to hurling training and matches in town and was in regular use until it was stolen from the house I lived in while at college.

Not everyone needs a mountain bike, though, so what would I do with the money instead? Savvy investors look for a return on investment when comparing different proposals. The return is based on the profit generated by the investment and it’s based on a percentage of the overall investment. So a €10 profit on a €100 investment is a 10% return – most investors would jump at such an opportunity.

Investments aren’t without risk. The profit is the reward for the risk and work, but it’s important to remember that not all investments go according to plan. So rather than invest all of your money in one thing, perhaps set aside some of it for a rainy day fund or spend some of it on something that gives you enjoyment, such as new football boots, books or computer games.

Invest in something you love

Let’s presume that after taking all of the above into consideration, there is €300 to be invested. The next question is to decide on where you’re going to invest it. The best advice is to do something you love, whether that’s dairy farming, laying hens or cattle.

On the dairy side, a high-EBI (Economic Breeding Index) dairy heifer calf will set you back about €300, which will be just about affordable for most children who have their Confirmation money, pocket money and maybe some of their First Communion money left. If there isn’t enough, perhaps some additional borrowing could be secured from the bank of mammy and daddy?

If the farmer refuses, find someone else to deal with as that farmer is obviously very short-sighted

The initial outlay is one thing, but the spending doesn’t stop there as the calf needs to be fed and cared for. The costs involved will vary depending on circumstances but these need to be carefully considered before any animal is purchased. It’s much easier to work it out if you are from a farm but even if you are not it should be easy enough to find a farmer in your locality who would be willing to allow the calf to be reared on their farm. This is called contract-rearing.

Negotiation skills come into play here. Official contract rearing charges are about €1.20 per animal per day. This would mean that the cost of rearing the animal would come to about €440 up to a year old.

However, if you offer to look after the calf yourself, along with some of its comrades on the farm, then the farmer should waive the contract-rearing fee. If the farmer refuses, find someone else to deal with as that farmer is obviously very short-sighted.

Watching it grow

The best part about owning a calf is feeding it and watching it grow. While you are doing this you can also feed the other calves in the pen or shed so the increase in workload isn’t massive but it would be a great help to the farmer. The toughest part is when it’s still on milk, after that it’s easy.

At a year old, the heifer calf will be worth approximately €800 to €1,000 depending on size, breeding value and the prevailing market. With the outlook for milk prices looking good, the prices of dairy stock should remain high.

The decision will have to be made as to what then to do with the animal. The heifer could be sold at a year old, or kept on for another year and put in calf. The costs of keeping the heifer into its second year can be offset by continuing to help out on the farm, whether that’s the home farm or a neighbouring farm. Come September, and presuming the animal is in-calf, it could be worth between €1,200 and €1,400 depending on breeding value. This highlights the importance of buying a high-EBI calf.

If the heifer makes €1,300, that represents a clear profit of €1,000 over the purchase price less the time and effort involved in helping to rear her.

For an investor to treble their money in two years represents a massive return on capital. You could buy three calves with that money! Of course, you could also decide to keep the heifer yourself and lease her to a dairy farmer for €150/year which is a 12% to 15% return on investment and you may also get to keep her calves and watch your enterprise grow.