Agriculture Investment

Agriculture Investment – A Must Read Article

Finding the best agriculture investment can be tricky for the inexperienced investor with little or no knowledge of the sector, but there are of course many different options available including agriculture investment funds, direct agricultural land investment, and purchasing equities in agricultural companies. In this article I will go some way to investigating the different options, the risks they present to investors, the mechanics of how each type of agriculture investment works, and the returns that are currently being achieved.

Firstly we will look at the relevance of agriculture investment for the current economic climate, and whether this particular sector shows us the signs of being able to generate growth and income.

The Current Economic Climate

The global economy is still in a state of turmoil, and the UK in particular is cutting back public spending to reduce an unmanageable national debt, the population is growing, and quantitative easing is likely to lead us into a period of extended inflation. Also, the lack of economic visibility means that it is very hard to value assets such as stocks, and interest rates being so low means that our cash deposits are not generating any tangible income to speak of.

So what does this mean for investors? It means that we need to buy assets that have a positive correlation with inflation i.e. they go up in value quicker than the rate of inflation, these assets must also generate an income to replace the income we have lost from cash, and finally any asset that we purchase must also have a strong and measurable track record.

It is very clear that agriculture investment, especially investing in agricultural land, displays the characteristics of growth, income, a positive correlation with inflation, is easy to value, and has a clear and evident track record to analyse, and as such agriculture investment ticks all of the relevant boxes to potentially become the ideal asset class for investors today.

Agriculture Investment Fundamentals

The fundamentals supporting agriculture investment are pretty easy to measure; as the global population grows we need more food, to produce more food we need more agricultural land as this is the resource that provides all of the grain and cereals that we eat, and all of the space to graze the livestock that end up on our plate. So we are dealing with a very basic question of supply and demand, if demand increases and supply can’t keep up, the value of the underlying asset increases, so let’s look at some of the key indicators of supply and demand for agriculture investment.

For seven of the last eight years we have consumed more grain than we have produced, bringing the global store down to critical levels.

Since 1961 the amount of agricultural land per person has dropped by 50% (0.42 hectares per person down to 0.21 hectares per person in 2007).

The global population is expected to grow by 9 billion by 2050.

Most think tanks and experts believe that we will need to increase the amount of agricultural land by 50% to support that growth, essentially a productive field the size of greater London need to be found every week.

In the last ten years virtually no more land has been bought into production as climate change, degradation and development and a host of other factors mean that there is little or no more new land we could use to farm.

The underlying asset that produces our food, the land, will become more valuable as more people demand food.

Agricultural land value rise when the food it produces can be sold for a higher price, making owning farmland more profitable, and food prices are at a 40 year low, leaving room for around 400% price inflation. In fact a bushel of wheat cost around $27 in the early seventies and now costs just $3.

Farmland in the UK has risen in value by 20% from June 2009 to June 2010, and 13% in 2010 alone according to the Knight Frank Farmland Index.

So the fundamentals supporting agriculture investment are sound and very clearly demonstrate a good picture for potential investment. But can we absorb price inflation? Well there are a myriad of studies that tell us very clearly that as a population, we absorb increases in food prices almost 100%, and sacrifice spending in other areas, so yes, we can.

Methods of Agriculture Investment

Agriculture Investment Funds

There are many types of agriculture investment funds to choose from, most invest in farming businesses, other purely in arable land, and others by stock in agricultural services companies. Most agriculture investment funds are showing excellent growth, and the fact that they are buying has increased the level of demand in the market therefore their mere presence is contributing to capital growth. Rural agent Savills recently commented on the fact that they have access to £7 billion in capital from fund to purchase farms, that is enough capital to purchase six times the amount of farmland

Home To Invest

Using Your Home To Invest

Many people dream of owning some investments one day. People look forward to owning something that will hopefully give them some money in the future. For a lot of people though, this dream never eventuates as lots of people think that they need to save lots of money before they can think about investing any money. Sadly, lots of people don’t know the tricks to budgeting and saving money so their dreams of investing remain on the “to do” list for many years.

Having a good control over your money is certainly the first stepping stone before you consider any investment. Saving sums of money will lever you into certain investments such as term deposits, managed fund, shares etc. However if you wished to invest in a property, it would be really difficult to save sufficient money to buy an investment property especially if you already owned your own home. So what can you do as an alternative?

Well if you already own a home you are likely to have some equity in it especially if you have had it a long time, paid a lot off your home loan or if property values have risen since you purchased it.

What Is Equity?

Equity is the difference between what your home is worth and what the balance of your home loan is. In other words it is how much of your house you actually own.

e.g. Jack has a property worth $380,000 and he has a home loan for $180,000. His equity is therefore $200,000.

Peter and Jan have a property worth $684,000. They have a two home loans totalling $249,000. Their equity is therefore $435,000.

How Does Equity Increase

There are a number of ways that the value of your equity can increase

1. Paying down your home loan

2. Paying out your home loan

3. Property values increasing

4. Improving your home so the property is worth more

How Do You Use Equity To Invest

Banks are generally willing to lend you money against the security of your house. They take a mortgage over your home which gives them the power to sell your home if you don’t repay your loans. They are often willing to lend about 80% of the value of a property. This means you might be able to take out a loan against your house and use that money to invest.

e.g. Jack’s property is worth $380,000. IF the banks were willing to lend him 80% of the value of his home, then they might consider lending him $304,000 ($380,000 x 80%). As he only owes the bank $180,000 on his home loan, he could have the potential to borrow some more money and to use this money to invest. He could potentially borrow up to $304,000 giving him access to $124,000.

Peter & Jan’s property is worth $684,000. IF the banks were willing to lend them 80% of the value of their home, then they might consider lending them $547,200 ($684,000 x 80%). As they only owe the bank $249,000 on their home loans, they could have the potential to borrow some more money and to use this money to invest. They could potentially borrow up to $547,200 giving them access to a further $298,200.

What Sort Of Investment?

Depending upon how much equity you have available, you could use your equity to invest in any sort of investment that suits you and your particular circumstances. You would need to speak with an accountant / financial adviser / real estate agent / share broker to discuss your different investment options. You would generally be looking for investments that have the potential to rise in value over time. These are called capital growth investments.

There are many tricks to investing wisely and you should always do plenty of research and consider all of your options and personal circumstances before making a decision where to invest.

Loan Repayments

Any loan you take out to buy investments is likely to have some sort of regular repayment plan. As an example you might have to make a loan repayment each month or you may have to meet an interest payment every quarter. You can explore your loan options with your loan broker / banker.

A lot of investments don’t give you sufficient income to meet the repayments on the investment loan (such as property) or if they do, the income may not come through regularly enough (your loan repayment might be due monthly, but an investment such as shares generally only pays dividends half yearly). Before you look at borrowing to invest, you need to ensure this new commitment sits well within your budget and that you can afford to carry additional loans.

Risks

There are risks with all forms of investing and these should be carefully considered before you make any commitments. A financial professional will be able to discuss these with you. Borrowing money doesn’t increase or decrease the risk of a particular investment. That investment would carry its own risks irrespective of whether you paid cash for the investment or borrowed money for the investment. The investment itself doesn’t change based upon where you sourced the money.

What additional risks you do carry if you borrow money to buy investments is that if the in

Investment Guide

Investment Guide – How To Become A Rich Investor

The act of investing in, or spending money, time and effort on a business or some other things, in hope of making a profit, best defines investment. It could be Real Estate, Mutual Funds, Stocks, Foreign Exchange etc. Whatever it is, there are rules and guides to achieving success in investments, which, when adhered to, result in achieving much greater heights of success.

Considering the huge amount of risks associated with most investments, it is of vital importance, to know the rules and guides first, irrespective of one’s financial status, before one could engage oneself in an investment of any kind whatsoever, in order not to be an object of pity, due to a mistake, of not going by the rules.

According to experts, the Securities And Exchange Commission (SEC) of the United States, defines an individual as an Average Investor if the individual has $200,000 or more in annual income, $300,000 or more in annual income as a couple, or $1 Million or more in net worth. This established requirements by the SEC is to protect the average investor from some of the worst and most risky investments in the world. These investor requirements also protect the average investor from some of the best investments in the world, which is one major reason why, one has to be just more than an average investor.

In as much as there are millions of desirous investors that fall below average investors, it would be unfair and discouraging, to always mention of Average and Rich Investors without the poor investors, each time matters of investments arise. After all, both started from the scratch. A gradual process that metamorphosed them into becoming what they are today. One does not have to worry himself, provided there’s life, there’s hope for the common man and lots of investment opportunities ahead. Hence, starting out in an investment with a minimal affordable capital, is highly recommended for the poor investor, and with prudence, little efforts, time, hope, faith and patience, desired goals would be achieved.

The most important thing in investments is, one’s mindset. The mentally preparedness to cope with the great task associated with investments. Nothing good comes so easy in life! One has to ask oneself, a few important questions before embarking on a journey to investments. These questions are:

1. Am I really determined to start out in an investment?

2. What type of investment is suitable for me?

3. How much capital do I have to start out in an investment?

4. Should I invest solely or jointly?

5. How much is my risk appetite?

When one answers these questions correctly and still has desire to forge ahead in investing his money in an investment, then, he’s qualified for the next stage of success towards investment.

The type of investment that suites one, is totally dependent on the already existing investment types- Real Estate, Mutual Funds, Stocks, Foreign Exchange etc., the amount of one’s capital, and one’s special interest in specific investment types. All this put together, constitutes a guide to enabling him know exactly the investment type that suites him.

The amount of capital needed to start an investment depends on individuality, and the nature of the investment. Capital, shouldn’t be a major issue here, as there are investments- stocks, one can invest in with a couple of cents. Hence, capital is virtually irrelevant, when considering penny stocks. And should never be a discouragement from investing one’s money in an investment.

Investing solely or jointly is totally one’s choice to make. Both investments exist. As a beginner, investing jointly is highly recommended. Considering the inherent risks in investments, which will always be shared, as it would, for the profit, amongst the investors according to individual’s amount invested, is ideally suitable for a good start. However, investing solely, is beneficial too. Even more beneficial, provided one has all it takes to stomach the risks in one-man investments. The investment profits from investing solely, will never be shared with anybody other than the sole investor, who takes it all. Hence, the decision is left for one to make, considering suitability and convenience.

Though tremendous amount of risks are involved in most investments. The larger the capital invested, the larger the probable risks. Also, the larger the capital invested, the larger the probable investment profits depending on one’s approach to investment. It’s a matter of proportionality. The opportunity of becoming a Rich, Average, or Poor Investor lies directly at one’s door step. This is the final stage and guide towards a greater change in one’s financial status depending on one’s risk appetite. Hence, a bold step together with strict adherence to the rules and guides stipulated in this article, becoming a rich investor is guaranteed.

Invest Money

Should You Invest Money in Mutual Funds For 2011 and Beyond?

If you want to invest money for a better future and don’t want to constantly monitor your money, 2011 is as good a time as ever to invest money in funds. In fact, mutual funds offer most people the best investment options out there because they do the day-to-day money management for you. In the simplest of terms, here are some tips to help you invest money and find the best funds to keep yourself out of trouble in 2011 and beyond.

Keep in mind that you don’t invest in mutual funds to speculate in stocks and bonds. You invest in them because funds were designed as a way for millions of average folks to get a piece of the action in stocks and bonds with professional money managers making the investment decisions. Your job is to simply decide how much money to invest in each of the 3 basic types of funds, and then to pick the best investment options or funds in each area to fit your risk profile. Here are some tips, because 2011 and beyond could be a little tricky.

In order to really make your money grow over the years you need to invest in stocks. The average person’s best investment options in this department are equity (stock) funds. Equity funds range from aggressive growth funds that pay zip in dividends but can go up like a rocket in good economic times… to blue-chip equity-income funds that invest your money in large corporations that pay steady dividends with milder fluctuations in stock price. Since the higher a stock (fund) price soars the harder it falls, for 2011 and beyond I’d invest my stock money with the more conservative equity-income funds. It’s nice to get a 2% or 3% yearly dividend when you can hardly find 1% at the bank.

The second basic type of mutual funds is bond funds, and for 98% of the people they represent the best investment options for putting money into bonds. Millions of Americans invest money in bond funds, but few understand bonds, which is what these funds invest your money in. Here we keep it simple and go to the bottom line. If you want details, I’ve got a number of bond articles that go there. Simply said, you should invest money in bonds (funds) because they pay higher interest income than you can get elsewhere, and tend to balance out your overall investment portfolio.

Traditionally, bond funds can offset some losses from stock investments because they have often tended to be one of the best investment options when stocks were out of favor and in the dumps. In the bond department you can be aggressive or more conservative as well. For 2011 and beyond I would suggest you go conservative again because our economy and interest rate situation are precarious at best. Interest rates are near record lows and have been falling since the early 1980s. The economy is still struggling to grow with high unemployment.

What this means to you when you invest money in bond funds: when interest rates head back UP, SOME bond funds won’t be your best investment options. But remember, you need to invest money and keep it invested for the longer-term. You are not trying to speculate, but still need some money in these funds for balance. Your best investment in the bond department for 2011 and beyond: intermediate-term bond funds vs. long-term funds. The latter are too risky and will get burnt when interest rates go back up.

That takes us to the third and last of the basic investment options for funds and investing in general. Money market funds are very safe investments and pay interest income based on prevailing interest rates, which were historically low heading into 2011. Don’t avoid these safe investments because they have one redeeming characteristic other than safety: when rates go back up the interest they will pay will automatically follow suit.

So, yes you should invest money in mutual funds, now and in the future. The year 2011 will present challenges, but where else can you invest in stocks and bonds with professional money management working for you at a modest cost? Your objective should be to invest money and make the best of it. Your best investment options as an average investor haven’t basically changed much in over the past 40 or so years. You just need to focus on where to invest your money in funds so you can stay out of serious trouble when times are rough. Over the longer term, that’s the best you can do as an investor.

Smart Investing

Get Started With Smart Investing

Investing at its most basic level is very simple. The idea is to make money work for the investor, rather than the investor working for the money. This may sound like a simple concept, but it is an important one because of the limitations that everyone faces. Without investing, most people can only earn money by working. If they want more money, they have to work more hours or find a higher-paying job. At some point, they are going to hit a wall, and their income will level off simply because they cannot work 24 hours a day. That is where investing comes in.

Investing allows an individual to continue earning money 24 hours a day, seven days a week and 365 days a year. It does not matter whether they are working at their day job, mowing their lawn or simply doing nothing. In other words, investing maximizes an individual’s earning potential.

Common misconceptions about investing
There are many misconceptions about investing, and unfortunately, they often discourage people from investing their money. Instead, they simply place it in a savings account and earn a pitiful return or worse yet; they stick their savings under a mattress. One common misconception is that investing is gambling. Nothing could be farther from the truth, but many people see it this way because some investors “gamble” by investing their money recklessly without doing proper due diligence. A true investor always performs a thorough analysis and only risks their capital when there is a reasonable expectation of earning a profit.

Reasons to invest
There are many different reasons to invest, but they all boil down to one thing: making more money. This is not about greed; at least, it is not for most people. Investing is becoming a necessity because without a healthy investment portfolio, many individuals will not be able to maintain their current lifestyle once they retire. Why? Because the days of working the same job for 30 years and retiring on a fat pension are coming to an end, and the burden of planning for retirement is shifting away from the state and onto the individual. This is happening because governments around the world are tightening their belts, leaving the future of many pension programs up in the air. This makes the outlook grim for those who do not prepare. Investing allows individuals to take control of their own future and ensure financial stability in their retirement years.

When investing
Good investing starts with skepticism and common sense. Get-rich-quick schemes are not real investing but gambling. The buyer beware principle applies the same way to investing as it does when making other purchases. If something sounds too good to be true, it probably is. Leave the risky ventures to those who have the money to lose. Smaller investors should stick with established and reputable investments.

Some good diversified investments
Apart from avoiding dangerous investments, prudent investing centers on diversity. There are several good ways to do this:

Mutual funds are perhaps the best-known investment vehicle. Basically, they work by pooling money from different investors under active management. Those in charge of the fund will then invest it in whatever types of investments the fund is set up for. This can range from the very high to low risk. They are popular in part because the ease in which investments can be made once an account is open and the thought of having one’s money under constant management.

Exchange traded funds (ETFs) are somewhat like a mutual fund in that they are a pool of money from different investors. However, they have some important differences. While mutual funds are under constant management and will try to beat the market, ETFs are designed simply to follow a market or index (through a basket of investments that will generally track it very closely). This could be anything from the S&P 500 to commodity markets. The main advantage of ETFs is that they require little active management and thus have lower fees than mutual funds. In addition, they can be bought and sold easily just like a stock, and give the investor greater control over when capital gains taxes taken. The drawback is that investor cannot hope to do better than the markets, although they will not do worse than them either.

Real estate investment trusts (REITs) are for those who would like to be invested in property but not all the responsibilities that come with managing it. These funds also pool money but in this case invest it in property. While it is generally commercial property, there are REITs for all kinds of property. By law, they must pay out most of their gains annually.

All of these instruments offer small investors great ways to diversify. However, they still need to be chosen very carefully since some are much better than others. In addition, follow the principle of not putting all one’s eggs in one basket. For example, if investing in mutual funds, choose funds that include diff