5 Misconceptions Preventing You From Growing Your Wealth

By Kate James

Our sector of the world - food production, technology, and consumer preferences - is constantly evolving. The same is true of agriculture investors. A practice once thought to be reserved for the older, wiser, and wealthier is now more inclusive of all ages, demographics and backgrounds, but beginner investors may still be clutching to traditional stereotypes. We’ve compiled and worked through a list of five common investing misconceptions that could be preventing you from making that next investment to grow your wealth.

1) Stocks and Bonds are the Only Options

When thinking about investment types, stocks and bonds rise to the top as the most common. While the two certainly play an important role in asset allocation, it’s critical to keep in mind that there are other ways to grow your portfolio. Alternative investments, such as land and agriculture, are some of the oldest, most profitable investments available that provide tangible returns. Most alternatives are negatively correlated to the stock and bond markets, making them an excellent option for hedging portfolios against market volatility. 

2) Investing is Too Risky

While there is a certain degree of uncertainty attached to any investment, there are many ways to mitigate risk and help protect your wealth. 

Asset Allocation

An investor can prevent significant loss by investing in a variety of assets, such as stocks, bonds and cash. If one asset class fails to provide the expected returns, another asset class can counteract that loss. Allocating 10-15% of a portfolio to natural resources such as agriculture or timber is a common practice amongst institutional investors.

Diversification

You can help protect your portfolio during a downturn in the market by creating variety in your investments. Investors can diversify within asset classes by choosing to allocate their wealth across multiple industries. For example, Harvest Returns has three main offering verticals - indoor agriculture, grass-fed livestock and AgTech - that have brought significant returns to our investors. 

Identifying Risk Tolerance

Determining your risk tolerance (conservative, moderate, aggressive) can help narrow down which asset class is most suitable for your comfort level. Investing in early stage companies can be inherently risky, so do not invest more than you can afford to lose in these types of offerings.

3) Too Complicated and Time Consuming

If you work a 9 to 5, chances are you don’t have time to babysit your investments, but you may want to break into the investing world if you’re looking to reach those long-term financial goals.

Although some investment types - such as real estate or individual stocks - require more intense management, there are other options to consider that allow you to grow your wealth without having to micro-manage the project yourself. For example, our team at Harvest Returns handles all aspects of the investing and asset management process over the life of the capital raise. This creates room for you to select one, or even multiple, projects that interest you without having to commit an unreasonable amount of time or energy. You invest, we take care of the rest.

4) Only Reserved for the Older and Ultra-wealthy

A report from the CFA Institute found that 31% of millennials began investing before they turned 21, compared to 14% of Gen X. According to Fortune, “new generations are driving their capital to new frontiers, on new platforms, with new priorities.” With the internet and social media making investing more accessible, younger generations are capitalizing on opportunities at the touch of a button. 

Greater accessibility means investors of all ages can tap into the market which best suits their income levels. For example, at Harvest Returns our minimum investment starts at $5,000, but many individuals invest at significantly higher levels. The investing world is expanding to include forward-thinking individuals who want to grow their wealth - and the age of that population is shifting to match the trend. 

5) You Have to be an Expert

Perhaps the most common misconception investors who want to influence the agriculture industry have is that they must come from a farming or ranching background. At Harvest Returns, we form a passive partnership between experienced agricultural producers and investors seeking a stronger connection with their food, fiber and fuel system. Investors get to choose a project they are passionate about from our profile of high-quality, specialty agriculture investments without ever having to set foot on the operation. This allows investors to make an impact in the industry without possessing any former knowledge. The farmers and ranchers focus on growing their product so you can focus on growing your wealth.

The investing world is multifaceted - as are the assets you can choose from to create variation in your portfolio - and it can be overwhelming for someone just beginning to grow their wealth. Don’t let these common myths hold you back any longer. There are a multitude of ways to access reliable information and assistance when it comes to managing your investment portfolio and selecting the asset class best suited to your financial goals.

This post is for educational purposes only and not intended to be investment advice. Consult a professional prior to investing.