Big returns from a booming business
Farmland is a proven source of higher returns than you get from more traditional portfolios.
U.S. farmland averaged roughly 11% total annual returns (income plus price appreciation) from 1992 to 2021, according to research from FarmTogether, an investment platform that allows qualified investors to purchase stakes in U.S. farmland without buying a whole farm.
In comparison, the S&P 500 returned only 8.0%.
When considered on a risk-adjusted basis, farmland outperforms the stock market by a wide margin.
It's even better than traditional real estate, better than bonds and gold.
Farmland investment combines the allure of stable income with gains from long-term productivity increases, as population growth and the subsequent demand for more and better food drive improvements in farming technology.
All this may eventually prove that Gates has been a smart early investor once again.
What's in it for Bill Gates?
The farmland market remains very fragmented, both in the U.S. and globally: Most farms are still family operations.
But since the 2008 financial crisis, more financial institutions and rich individuals have been buying up the asset.
Gates is known as a shrewd investor, and his growing stake in farmland also fits in nicely with his charitable foundation, which aims to improve food production in poorer countries, among other objectives.
Gates made a splash in 2017 when he bought $520 million worth of U.S. farmland from the Canada Pension Plan Investment Board, and he’s continued to invest since.
When you consider U.S. farmland’s strengths as a passive investment, it’s not hard to understand why.
A rare opportunity
Because some 96% American farms are family-owned, farmland has always been a difficult asset class for an investor to buy into.
But that’s changing right now.
Over the next 20 years, approximately 370 million acres of U.S. farmland will change hands, according to the American Farmland Trust.
That’s because a large proportion of the next generation evidently isn’t interested in taking up farming: Farmers over age 65 own 40% of the land and outnumber farmers below 35 by a factor of six to one.
So as more farmers retire and sell or rent out their land, a profitable but difficult-to-acquire asset is hitting the market during a rare window.
How to invest in commercial real estate
How can you get in?
FarmTogether makes it as simple as creating an account. The full-service platform provides the information you need to directly invest in specific properties, while FarmTogether takes care of the heavy lifting.
Since farmland is genuinely useful and productive — not just some hypothetical store of value — you get to see immediate benefits. You can get a cut from both the leasing fees and crop sales, providing you with a cash income while the value of the asset increases.
FarmTogether’s offerings are primarily aimed at experienced investors looking to diversify their portfolios with alternative assets. But even if you’re not an accredited investor with the SEC, you can sign up and get a sampling of the kind of data investors can access.
“As an asset class, there have been barriers of entry” for new investors, says FarmTogether’s David Perez, adding that part of his company’s roadmap is to open its offerings up to a wider swath of investors.
If all of this sounds good to you, what are you waiting for? If it’s good enough for Bill Gates, it’s worth a look for you, too.
Diversify your investments with farmland
You don’t have to own a farm to profit off farmland.
Farmland has proven to be one of the most stable assets of the past few decades — and with FarmTogether, you’re able to invest today. FarmTogether's platform gives accredited investors access to this exciting market, and one of the highest-yielding asset classes on a risk-return basis.
Sign up for FarmTogether to start investing in farmland.