Plowing Your Portfolio? What You Should Know Before You Invest in Agriculture

Invest in Agriculture

Investors both green and seasoned often turn to traditional opportunities like stocks and real estate to make money. However, planting the seeds of your financial future could take on a more literal meaning in the form of agricultural land investment. Before putting your money in agriculture, you should know a few things about the pros, cons, and how to choose the best farmland investment companies for your needs.

Agriculture protects against inflation

Investing in agriculture helps protect your portfolio against inflation. Because food prices continue to rise, agriculture investments have become beneficial to investors looking to diversify their portfolios. The other inflationary benefit is that as the global population grows, those additional mouths will need food. 

As more people need more food, the value of crops will increase the value of the land that grows it. That means that the potential ROI can only increase as time progresses.

There are several ways to invest in agriculture

Investors interested in agriculture can make a profit in a handful of ways. First, investors can earn money by selling crops each season. Growing in-demand crops will make the land more profitable. The second is selling the land after the value increases over the years. Investors can improve the land by adding structures and buildings that are more valuable, such as silos. Most agriculture investors also make money by renting the land to farmers who want to work it. 

It has long-term investment benefits

Agriculture offers a long-term investment opportunity. Investors who want a quick return on their investments might not want agriculture in their portfolio. Investors who can wait will appreciate the long-term benefits. Investors have to wait until the crops grow to enjoy the financial benefit of selling them. 

Some crops require several years before the plants reach maturity to deliver a respectable yield every year. Since people need food, the wait can pay off dramatically, especially as population growth continues. 

Crop insurance protects investors

Investors afraid of adding agriculture to their portfolios need to know that agriculture comes with crop insurance. If a natural disaster destroys your crops in any given year, farmers and investors receive insurance payments. This surety is a win-win situation for investors who want their annual yields, so make sure to take advantage of it. 

Agriculture does not follow the stock market

Agriculture is a safe investment that offers an opportunity for investors to protect themselves from the volatility in the stock market. Farmland does not do what the stock market does, and it stays relatively consistent. It covers portfolios against recession and changes in the stock market. 

Agriculture helped shape the United States, and it continues to be attractive to investors and farmers. Investors do not need to know how to farm, as they can lease the land to farmers and reap the benefits. Agriculture is a viable investment opportunity that anyone can buy. 

Wrap up

Investing in agriculture is a beneficial choice for investors who want a long-term opportunity with seasonal and annual yields. You don’t have to be a farmer to invest in farmland. You simply need to take advantage of the opportunities to buy land.

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.