Investing in agriculture can be lucrative for every investor looking to invest in long-term payoff outside the stock market or real estate business. The demand for food and other farmed commodities will always be present and increasing.
Investing in agriculture is a good move for savvy investors who want steady returns. It is also an excellent investment for those who want to diversify their portfolios. It has been estimated by the year 2050, economic and population growth will result in the highest demand for food and commodities in history.
Also, in the last 20 years, there has been more interest in organic foods without modifications which has added extra demand for free of pesticides and is not genetically modified. This type of demand is expected to continue to grow in the next thirty years, as well.
How can you invest in agriculture?
There are numerous ways through which you can invest in agriculture. You can invest directly into an agriculturally based business or mutual funds related to agricultural companies. You can invest in farmland yet to be developed with future development possibilities. Also, you can invest in commodities traded on the stock market.
You can buy or sell futures for crops such as rice, wheat, sugar, and soybeans using Exchange Trade Funds (ETFs), which are traded like stocks. ETFs follow a product’s value making this type of investment easy and profitable.
Commodity investments are risky and affected by innumerable variables such as severe flooding, droughts, or other random acts of nature. These disasters could result in seasonal losses. However, in most cases, these setbacks are overcome and result in high and steady returns.
Purchasing stocks in farming supply or food production companies, or agricultural mutual funds offer a more traditional agriculture route. Although the potential profits and values will correlate with the overall industry trends, this type of investing will generally have great returns.
Investing in Agriculture is Good for All Generations
Millenials
Investing in real estate or the stock markets is the most common investment option for newer investors. However, both markets have endured significant volatility and are considered over-hyped by numerous investment experts.
Hence, Millennials need to consider other investment options. Investing in agriculture, especially in harvest-yielding farmland, allows them to hold a complex resource or asset, which will give them great returns well into the future.
Generation X
Generation X is moving toward retirement, and many have likely been investing for years. Because of this experience, the Generation X investor is moving towards less risky and safer investments. While the agriculture business does carry some risks, it is considered a safer investment because food and commodities will never be obsolete. Because of the years of foreseeable demand, agricultural investments are perfect for Generation X investors.
Baby Boomers
Baby boomers are currently retiring at the rate of around 10,000 per day in the United States. Many don’t have enough saved for their retirement because of a lack of preparations and the stock market fail of 2008 and 2009. They are searching for safe investments that could produce consistent annual returns to top up current pensions.
While different agriculture investments take approx. 5 to 20 years before producing returns, there are agricultural investments with returns within two years of investment. This quicker turnaround on investment makes some agricultural investments perfect for the Baby Boomer.
Conclusion
Based on several variables and analysis, it is clear that investing in agriculture is far less risky than real estate or the stock market. The reason for lower risk is that food and commodities will never be obsolete, and as the population and economy grow, so does the demand for both.
You can wholly invest in agriculture or use it to diversify your portfolio. However, investing in agriculture is a good idea for every severe investor, no matter their experience or age. Whether you are looking to invest in your future retirement or fund your current lifestyle, agricultural investments will provide a reasonably safe and steady return on investment.
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