Diversify your portfolio with Agricultural Investments

“Real estate cannot be lost or stolen, nor carried away. Managed with reasonable care, it is about the safest investment in the world.” - Franklin D. Roosevelt

Real estate, especially agricultural land or land that produces a product, is one of the oldest and most profitable investment. The graph below shows agricultural real estate outperforming other classes of investment assets over the longterm.

Asset Class Comparison (% Annual Returns: 1970 - 2016)

Real assets, like income-producing agriculture, provide a hedge against inflation, and are an attractive investment for a diversified portfolio. There are wide variety of agricultural products, geographies, and methods in which to invest, each with their own risk/return profile.

With each passing year, the world must feed more people with less arable land. Global demographics will continue those trends as the earth's population grows by another three billion people in the next few decades. In a time of financial uncertainty, there is no better asset to own than income-producing farm, timber, or ranch land.

We are not a financial firm here who solicits financial advise, so why are we concerning ourselves with discussing the importance of diversification in an investment portfolio? Multiple reasons really. Land is becoming increasingly difficult to obtain for the average person who does not have deep pockets. Secondly, the competitiveness in the agricultural community is increasing with commodity prices and the agricultural economies of emerging countries. Family farms are having a difficult time maintaining and the next generation is unable to buy-out the previous generation.

There is a shift in the way farms and ranches are owned and operated to meet the challenging times. And agricultural investments is one of them. Agricultural investments, as mentioned previously, offers investors, financial planners, and fund managers the opportunity to diversify their portfolios.

Diversification is important as it can help protect a portfolio during a downturn in the market. When other, riskier investments are performing well, it can be easy to forget about (or avoid) investing in safer, low-risk investments that don’t promise a large, immediate return. Nevertheless, diversifying a portfolio is essential and agriculture can make a great addition by providing stable returns with very low risk.