Where are All the Billionaires Investing Lately?
We all look to billionaires for advice on investing possibilities and decisions. After all, they have the resources to invest in almost whatever they choose, and they frequently employ a team of professionals to guide them. Therefore, it is important to pay attention when we learn that billionaires are purchasing farmland.
According to the Knight Frank 2017 Billionaire Report, after art and real estate, farmland was the third most preferred investment for billionaires. The report also revealed a 60% rise in farmland investment over the previous five years.
The wealthy are buying farmland for several reasons.
The Billionaire Investors
Wang Jing, a Chinese billionaire, is one of the greatest investors in agriculture. Wang has been purchasing big parcels of land in South America and Africa to use the area to cultivate food for his nation.
Stan Kroenke and Prince Alwaleed bin Talal of Saudi Arabia are also significant investors in farming, primarily for food production.
The same is true of George Soros, who has acquired more than 1 million acres of farmland in Argentina and is best known as “The Man Who Broke the Bank of England.” His objective is to assist in reviving the nation’s agricultural sector.
With the help of Bill Gates, Warren Buffet, and Carlos Slim, “The Grain Belt Express” is a farmland acquisition company. To buy countless acres of farmland, they have raised nearly $2 billion.
Jeff Bezos, the creator of Amazon, has also joined the group of billionaires who buy farmland. About 400,000 acres of land in Texas have been purchased by him.
Any effective investment strategy must include diversification.
The wealthy prefer to focus on a small number of asset types, notably stocks, bonds, and even fine art, as their wealth continues to increase. However, because of their concentration, they are susceptible to changes in the market.
Farmland thus represents a new asset class for many of these billionaires that can aid in portfolio diversification. Unlike farmland, which is a more stable investment, stocks and bonds may be somewhat erratic. These individuals can diversify their portfolios and shield their money from stock market volatility by investing in farmland.
Hedging Against Inflation
Prices for products and services typically increase with time. This is brought on by inflation, which reduces your purchasing power. Some investors decide to put money into assets that are anticipated to appreciate more quickly than the rate of inflation as a hedge against inflation. Farmland has traditionally been a reliable inflation hedge.
As the world’s population rises, agricultural land is also getting harder to find. Crops and animals are always in demand, and investors can either sell them for more money or keep them as tangible assets to pass down from one generation to the next.
Many of these millionaires are purchasing land in developing nations where prices are lower and there is the most room for growth. Additionally, they are purchasing land in the US, where there is a rising demand for organic food.
These investors can manage crop production and make sure they are getting the maximum return on their investment by owning farms. They have prospects for long-term capital growth and cash flow with farmland. It may offer tax benefits and other advantages. Above all, despite population growth and the enormous need for food, millionaires will always have safe access to food. Some even think that by investing in farmland, they can contribute to the development of a more sustainable food system.
Since farmland is a long-term investment, you should undertake diligent research and learn about the local market before making any decisions.
Farmland investments will experience ups and downs, just like any other investment.
The secret is to have a long-term perspective and be ready for the hard times. A very gratifying experience can be had by investing in farming if you can endure the rare bad year.