Capitalizing by financing agricultural businesses and farmland activities is probably one of the best ways to invest your funds as there is little to no risk and they generate quite stable returns over the years. Plus these investments act as a natural hedge against inflation while industrial mechanizations continue to produce higher yields. So if you are wondering how to invest in agriculture, here are some quick tips to help you along the way.
Acquire a Land Ownership Title
Nowadays there are plentiful online platforms and organizations like Farmfolio that offer innovative solutions to traditional farmland investments. By simply acquiring LOTs (land ownership titles) both accredited and non-accredited investors can directly purchase a subdivided piece of a larger farm. A turnkey system such as FOA (Farm Owners Association) manages and handles operations related to the farm while you as LOT owner will continue to receive revenues from continued harvest. Plus, you also have the choice to sell your title to another potential owner any time you desire to do so.
Buy Agricultural Stocks
The agricultural industry is a vital part of the economy of any country as it greatly supports the GDP of a sovereign state at a national level. Furthermore, the agricultural industry produces various food products, fibers, fuels, and raw materials. You can find several farmland businesses that trade their stocks publicly. Hence you can create a diversified portfolio that can aid you to earn interest on already acquired assets along with the collection of substantial dividends from various ventures.
Hold Equity in Farmland Businesses
Another means to invest in farmland is becoming a joint owner or major stakeholder in establishments that primarily or directly operate within the agricultural sector. There are numerous types of businesses that provide different types of functions for the industry including the likes of crop harvesters, equipment manufacturers, food distributors, logistics & transport, and seed producers to name a few. Withholding equity in such kinds of businesses will naturally grant you ownership and greater command over the operations and decision-making ability along with a claim to potential profits earned in the meantime.
Invest in Agricultural ETFs
Agricultural exchange-traded funds offer you a basket of tradable assets such as bonds, stocks, and commodities. This way you can pool your funds for an assortment of goodies under the farmland umbrella thus resulting in one of the most popular choices when it comes to diversification of investment. Some of the best agricultural ETFs that you can invest in right now include the likes of Global X AgTech and Food Innovation ETF as well as Teucrium Wheat Fund.
Join an Agricultural Mutual Fund
These are professionally managed investment funds where money is pooled from a number of investors to purchase securities. Among their benefits include economies of scale, diversification, liquidity, and professional management. The majority of mutual funds are regulated by governmental bodies hence there are few chances of fraud or misgivings. Plus they are also required to publish information regularly regarding their performance and how they measure up against set benchmarks that they aimed to achieve.
Participate in Agricultural REITs
Agricultural real estate investment trusts operate as companies that finance income-generating farmland that allow individual investors to earn dividends. Furthermore, you don’t have to buy, finance, or manage any of the involved properties yourself which is a great way to earn passive income without even stepping on a farm. Some of the best agricultural REITs that you can participate in as an individual investor today include the likes of Farmland Partners Inc. and Gladstone Land Corporation to name a few.
Support Farmland Debts
Farmers are always in the need of funds to not only cultivate their crops but also buy new and improved equipment that can assist them to perform their day-to-day activities. This is where you can become a lender to them by providing the necessary capital required for the fulfilment of their needs. Once they borrow money from you, earnings can start coming your way as they, not only pay back the principal amount but also the interest charges applied to each payment. Before you know it, you can quickly cash in a considerable amount of earnings over the passage of time.
Final Word
In the end, I will like to conclude that in many countries farming businesses are often supported by governmental bodies and agencies. This is due to the fact that agriculture plays a significant role in the development of human civilizations. Hence certain farms may also benefit from the exemption of wealth tax along with mortgage interest deductions from their taxes.
Lastly, it is always best that you consider diversifying your investments as the golden rule of thumb is to not put all of your eggs in one basket. There are abundant ways through which you can invest in farmland and start earning passive income without even stepping on a farm. With new technologies and online platforms, a lavish list of opportunities is now made available for investors to directly access farmland-related investment prospects.
