Farmland: A Time-Tested Investment in the Age of Crypto

In times of economic uncertainty, many investors seek alternatives to traditional markets. Bitcoin, in particular, has gained attention as an emerging investment option. However, there are significant differences between digital assets like Bitcoin and real assets such as farmland. Real assets, like gold or real estate, have intrinsic value, whereas cryptocurrencies derive their value from factors like scarcity and investor demand. While Bitcoin may capture headlines, real assets like farmland may offer more stability during periods of inflation and economic volatility.

Farmland is a Proven Investment Option

Farmland has consistently delivered strong historical performance, providing positive returns every year since 1990. The average return during this period was 11%, surpassing the gains of major stock indices such as the S&P 500 and the Dow Jones Industrial Average. Farmland is also known for its historical ability to resist inflation, with values increasing in line with the Consumer Price Index (CPI). As inflation continues to rise, farmland remains a valuable asset, further bolstered by increasing global demand for food production, which is projected to rise by 59% to 98% by 2050.

Unlike cryptocurrency, farmland has a long track record as an investment. Farmland investment in the U.S. began gaining traction in the 1980s, and its value has remained stable over time. Prominent investors, such as Bill Gates, have recognized farmland’s potential as a steadily appreciating asset, making it a viable option for those seeking long-term returns.

Real Assets and Market Volatility

Cryptocurrencies like Bitcoin have exhibited low correlation with conventional markets in their short history, leading some investors to view them as a safe-haven asset. However, cryptocurrencies are not immune to volatility. For example, during the market downturn in March 2020, Bitcoin lost 50% of its value in a single day, while gold, another safe-haven asset, declined by only 4%. While Bitcoin rebounded, its price fluctuations remain significant. Additionally, Bitcoin’s correlation with traditional markets tends to increase during periods of broader risk, as seen in recent months.

Source: Yahoo! Finance, Bullion By Post

Real assets, including farmland and gold, have historically demonstrated resilience in the face of market volatility. Farmland, in particular, offers intrinsic value due to its essential role in agricultural production, providing more stability during uncertain economic conditions.

Farmland has Built-In Demand

One of the key challenges facing cryptocurrency is maintaining reliable demand. Bitcoin and other digital assets derive their value from their use in transactions, scarcity, and investor interest. However, some prominent investors, such as Warren Buffett, have expressed skepticism about cryptocurrencies, noting that they do not generate tangible value or produce anything.

In contrast, farmland is backed by real-world demand. As the global population grows and the need for food production increases, farmland is likely to become even more valuable over time. This inherent demand makes farmland a more stable investment option compared to assets that rely on speculative interest.

Retirement Investment Options: Farmland vs. Cryptocurrency

While investing in cryptocurrency has become easier in recent years (thanks to platforms like Coinbase), it still presents challenges for those looking to include it in retirement accounts. Most retirement investors must use post-tax dollars to purchase cryptocurrency, and setting up a Crypto IRA through a Self-Directed IRA can be complicated. Additionally, there are limited options for holding cryptocurrencies in retirement accounts, which may result in complex tax implications.

In contrast, farmland investments can be included in retirement portfolios more easily through traditional IRA funds, offering investors a simpler path to diversifying their retirement savings with alternative assets.

Farmland vs. Bitcoin: Stability vs. Speculation

Cryptocurrencies represent an exciting frontier in the world of finance, but they also come with significant risks and uncertainties. Investors looking for high growth potential may be drawn to digital assets like Bitcoin, but it’s important to consider the volatility and speculative nature of these investments.

Farmland, on the other hand, offers a time-tested alternative with built-in demand and stable long-term returns. As global food demand increases and farmland becomes more scarce, the value of this asset class is likely to continue rising, making it an appealing option for those seeking security and steady growth in their investment portfolios.