Please ensure Javascript is enabled for purposes of website accessibility

Should You Be Buying Farmland?

By Selena Maranjian – Updated Apr 6, 2017 at 1:40AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The investment grass isn't always greener elsewhere.

We're human -- and that means we often compare ourselves to others. I know that when I'm at a restaurant with friends, sometimes I wonder if I should have ordered what someone else ordered. And when I hear about some savvy investor investing in something, I wonder whether I should be investing in that, too.

That happened recently when I learned that the famous investor Jim Rogers has been investing in farmland in Brazil and Canada. I wondered what he knows that I don't. I wondered whether I should follow his lead. He did, after all, run the Quantum Fund with George Soros for a while, and has long been a financial author and commentator.

So -- should we all be buying farmland? Should we be abandoning our trusty dividend stocks and international mutual funds and whatever else we have committed our hard-earned dollars to?

Stick to your knitting
The answer is no. If you follow someone's lead without really understanding why they're doing what they're doing, you won't know how to evaluate the situation over time. If Rogers changes his mind and moves much of his farm money elsewhere, odds are you'll never know.

That said, we can still learn from investors we respect. With Rogers, we can note that he's essentially investing in agriculture, and we can do the same, even if we decide not to buy a bunch of raw farmland. Consider agriculture-focused mutual funds and exchange-traded funds (ETFs), for example. The Powershares DB Agriculture ETF is one possibility. It holds commodities such as corn, sugar, soybeans and wheat -- and has a five-star CAPS rating.

You can invest directly in agriculture-related stocks, too, such as:

Company

Industry Segment

CAPS Rating

PotashCorp (NYSE:POT)

Agricultural chemicals

****

Mosaic (NYSE:MOS)

Agricultural chemicals

*****

Deere (NYSE:DE)

Farm machinery

****

Agrium (NYSE:AGU)

Agricultural chemicals

*****

Terra Industries (NYSE:TRA)

Agricultural chemicals

****

Archer-Daniels-Midland (NYSE:ADM)

Farm products

****

Monsanto (NYSE:MON)

Agricultural chemicals

****

Clearly, our 130,000-strong Motley Fool CAPS community has high expectations of these big agriculture players. And there are plenty of others. You might also just look closer at your regular mutual fund holdings. Some are already investing significantly in agriculture on their own.

The bottom line is that there are lots of paths to riches. You don't need to pick PepsiCo or Coca-Cola to make money -- though both companies are likely to keep growing and rewarding shareholders over time. You can grow wealthy via real estate, stocks, or other investments -- you just need to stay within your circle of competence.

Longtime Fool contributor Selena Maranjian owns shares of Coca-Cola and PepsiCo. PepsiCo is a Motley Fool Income Investor pick. Coca-Cola is a Motley Fool Inside Value recommendation. Try our investing newsletters free for 30 days. The Motley Fool is Fools writing for Fools.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Archer-Daniels-Midland Company Stock Quote
Archer-Daniels-Midland Company
ADM
$81.65 (-5.13%) $-4.42
Nutrien Stock Quote
Nutrien
POT
Deere & Company Stock Quote
Deere & Company
DE
$334.22 (-3.44%) $-11.91
The Mosaic Company Stock Quote
The Mosaic Company
MOS
$48.53 (-7.60%) $-3.99
Monsanto Company Stock Quote
Monsanto Company
MON

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.