Low-risk and high-yield. Those are the key traits of a good investment. That is also what every investor is looking for, despite the recent instability in stock markets, real estate, etc. The great news is that there are other alternatives to explore that are often forgotten but with high returns over investment. We are talking about none other than farmland.
It is a great opportunity to invest long-term, grow your assets, and preserve wealth. Read our expert take on it here:
Cultivating Wealth
Many high-net-worth individuals have recently been riding a roller coaster of ups and downs in stock values, home values, and even the value of their bank deposits. But not all of them. Bill Gates, one of the wealthiest people on the planet, is an example of a high-net-worth individual who has chosen farmland as one vehicle to enhance and preserve his wealth. Although we commonly think of him as a high-tech computer genius, he is rapidly becoming the largest single farmland owner in the US. The software comes and goes, house values rise and fall, and bank accounts can evaporate overnight, but farmland keeps appreciating.Why Farmland?
The farmland is stable. It does not go away or disappear, and there isn’t any more of it. While the land is constant worldwide, the human population and food consumption grow yearly. This is a surefire formula for farmland to appreciate year over year and with only a few exceptions. This has occurred almost every year, with annual average appreciation of the past twenty years in excess of 4%. Investing in quality and productive farmland is one of the best tools for wealth preservation and enhancement. Now is the perfect time to diversify your wealth and protect yourself from the variability of other investments. With the proper guidance, that is.Farmland Value
Farmland is high in value, but how can you calculate it if you plan on investing? Understanding farmland value will give you a clearer picture of its capacity and alternative uses. FarmTogether states that “the sale price per acre should reflect the Net Present Value of all future annual income (or cash rents as they are often referred to) that the property can produce. So, if the land has the potential to produce $800/acre of crop income per year indefinitely, and we have a discount rate of 4%, then the value of the land/acre is $20,000.” Farmland value also varies by state. Although farmland value has changed over history, all recent events have led to its appreciation, growing steadily for the past 14 years. It’s essential to be aware of the factors that cause these changes: the agricultural commodity price market, the demand for agricultural products tied to population growth but also alternative uses of land, and technological advances.
Growing & Preserving Your Wealth
Having been on farm financing for decades and in the farming industry for longer, at Janus Ag Finance, we can help you leverage your cash into a long-term, safe, and stable investment in agricultural land. If you want to get more details, contact us today!