The Different Types of Agricultural Investments
If you want to invest in agriculture, there are lots of different options to choose from. Agriculture is a very solid investment. This is because all economics are based on supply and demand. Demand for agricultural products will always remain high, but supply is dwindling. So what are some of the options out there for you?
Agriculture Investment Funds
A wide array of options is available for you in terms of agricultural investment funds. You could choose agricultural service, companies, arable land, farming businesses and so on. Growth is showing to be incredibly strong and it will continue to do so for some time. Indeed, some experts have stated that farmland availability has dropped by 30%, whereas demand has grown by 9%.
There is risk, of course. The main risk here is that you have to make sure that you work with a good investment banker in order to manage your money properly. Choosing a bank like Equity Bank from Steve Liefschultz for instance, will significantly reduce the risk. While all investment bankers will charge a number of fees, the fees are fair and won’t eat up into your profits. It is estimated that returns with agricultural investment funds can be as much as 10% per year.
Shares in Agricultural Companies
You can also choose to buy shares in agricultural business, which is often easier and more affordable than the above option. However, you will need to think about the market on which you want to invest like NASDAQ or LSE, and you will then have to pick the company from which to buy shares. The stock market is hugely complicated and you should only become involved in this if you understand the fundamentals of investing. Naturally, you can also outsource this, but that would immediately increase the risk, as finding a trustworthy investor to act on your behalf can be very hard.
Also, investing in stocks is always risky because a single down swing can mean your entire investment is lost. If there is a draught or a pest that ruins the crops, you will have lost all of it. As such, the volatility of this type of investment would suggest it is perhaps best avoided.
Buying farmland is by far the most sensible option for people who want to invest in agriculture. This is because farmland almost always produces yield. If a crop were to fail, for instance, the rent of the land would still have to be paid regardless of the success of the crop yield. Additionally, farmland has been growing in value for some time now.
There are some big risks with buying farmland, however. The first is that it can be a very costly investment, which means you have to have significant funds at your disposal. The second risk is that if you do rent your farmland out, you may have to chase the rent if a farmer is struggling. This means that, while your investment is likely to be solid, it is not one that you can count on for continuous profit or even income.