Farmland is one asset class that has been a favorite of billionaires for centuries and is a great way to diversify your portfolio. But is farmland a good investment?
Farmland investing has a long history of producing stable returns.
The returns are due to increasing farmland values and the profit from the cash crops.
No one is making more land. As the population keeps increasing, we need to build more houses, acquire more land for transportation, shopping, etc., reducing the amount of farmland available.
Farmland offers a unique ability to provide inflation projection without the volatility of stocks. While stocks are considered a monolithic asset class, performance differences are based on different environments.
As per the report, the value of all types of farmland increased by roughly 15% year over year due to a robust agricultural economy and historically low-interest rates.
Farmland increases in value when agricultural products increase in value since the underlying land becomes more valuable. It makes farmland well-suited to retain value over time, even during recessions.