The way I see it, Bill Gates’ farmland investments are amazing, mainly for inflation protection. I’ve put my money where my mouth, but Bill Gates took it to another level and REALLY put his money in!
If someone puts that much money into something, they must really be convinced of the potential financial returns from it, so let’s unpack it a bit more.
Some facts about what he owns
Interestingly, farmland wasn’t as popular as it is now amongst investors in recent years. In fact, you could say that it wasn’t an appealing asset class for several reasons. So, when the Bill Gates farmland reports started circulating, many were under the impression that it was part of a bigger goal connected to climate change. However, it seems that’s not the case.
Many of us know him as an astute businessman and co-founder of Microsoft, but he’s added another title to his name – America’s top farmland owner. Or at least that’s what the media have dubbed him, so who am I to argue. Forget all the techy stuff, Bill Gates’ farmland ownership is a whopping 242,000 acres out of his total landholdings of 268,984 acres.
This qualifies him as one of the largest landowners in the US even.
This is spread out across states such as Wisconsin (1,188 acres), Florida (14,828 acres), Washington (16,097 acres) and North Carolina (874 acres). Of the 268,984 acres – apart from the farmland portion – 25,750 acres is transitional land and 1,234 acres is recreational land.
However, although a lot of people have only recently started paying attention to the Bill Gates farmland talks, it is not a new thing. It seems that the Gates’ have been exploring for years. By 2014, they already owned a significant amount of land, estimated at 100,000 acres across several states.
4 reasons why Bill Gates invests in so much farmland
1 – Portfolio diversification
Any investor will tell you that it’s not entirely wise to put all your eggs in one basket, which is why portfolio diversification is championed by many. Naturally, some believe that Bill Gates’ farmland investments are a way of doing so. The key with diversification is to invest in seemingly unrelated asset classes to offset the impact of one against the other.
What do I mean by this? Well, let’s look at the impact of the pandemic for example. Many asset classes were hard hit by it, and while some markets decreased by nearly 20%, farmland decreased by about 0.1% between the last quarter of 2019 and the first quarter of 2020. That on its own proves why farmland is becoming more and more appealing to many.
2 – Sustainability
When you consider Gates’ climate change advocacy, paving the way for a greener future could also be a motivation for his interest in farmland. While this is speculated, it only makes sense to rally behind long-term farming initiatives and organic living.
By consciously investing in farmland, some are of the belief that Gates is killing two birds with one stone – continuing to play a role in the fight against climate and at the same time, focusing on returns.
3 – ROI
Speaking of a return on investment (ROI), farmlands have a good track record. It works pretty much the same way as houses/property. Farmlands also have the potential to generate income through rental and crop payments. Should you decide to ultimately sell your land, it will most likely have appreciated, meaning that you will profit from the sale if all goes well.
In addition to the above, farmland is a low-volatility asset class – which makes for a great investment. Any asset class that has relatively low volatility doesn’t fluctuate as much as others in terms of value because it is not as heavily impacted by underlying and external factors, particularly global, political and economic conditions.
Don’t get me wrong, I’m not saying that farmlands are immune to any sort of fluctuations – that would be a lie. Historically speaking, farmlands have a steady track record in terms of ROI compared to other classes, so for most people, it’s a pretty safe bet.
4 – Inflation protection
This is something I’ve already alluded to – Bill Gates’ farmland investments could very well just be a way to protect his massive wealth from inflation. This is something that all the more experienced and alert investors know because of the stability of farmland, even in the most uncertain times.
No matter how rich you are, nobody wants to spend years accumulating wealth only to lose a significant portion of it because of circumstances beyond your control. You could say that farmlands provide that additional layer of protection or cushion for any investor who knows what they are doing.
Learn more about farmland investing (without buying a farm) in:
Farmland Investing | 5 reasons it’s the secret sauce for your portfolio and the easy way to invest
Is it still a good move or did Bill Gates get a special timing?
While little is known about the first Bill Gates farmland purchase, one could say that he definitely had foresight that others perhaps did not have at the time. Nonetheless, if you’re debating with yourself about whether to invest in farmland, the answer is YES! Do it now if you can. As in any worthwhile investment, the sooner the better.
Generally, farm prices have risen since he bought in, but it remains a good way to protect yourself from inflation.
This is perhaps the main reason why Bill Gates’ farmland purchase endeavors have proven to be successful and worthwhile. As the saying goes, the early bird gets the fattest worm. In fact, the NCREIF farmland index has remained stable and not had a negative year since 1991, that’s three decades of wholesome investing for those that jumped on the bandwagon.
As it stands, farmland remains one of your best bets for long-term investing. This is something you should be able to establish from the many Bill Gates farmland reports, because someone like him definitely wouldn’t waste so much of his money on something with minimal ROI – at least one would think not..
Farmland is a great source of passive income, much like real estate, and with a lot of people prioritizing sustainable living now, organic food is gaining traction all around the world.
Now, with the advent of technology and crowdfunding means, you can explore investing in farmland even if you’re not a billionaire. The high barrier to entry and significant minimum investments were some of the things that scared people away from buying farmlands. Fortunately, there are ways around it now – thankfully!
Specific Bill Gates farmland purchase
Now, I’ll be honest, in past years, farmlands were quite difficult to access because most of them were family-owned and managed, meaning that random investors weren’t necessarily always embraced. Although this is gradually changing, there is now hope for those looking to get a foot in the door.
I’m very big on educating myself and finding out what I’m in for before going all in, especially when it comes to my money. Research should be my middle name.
So, when you see the likes of Bill Gates hopping on to a particular bandwagon, look into it. Following trends and insights from people with a proven track record and success stories is something I highly recommend. Instead of basing your decisions on hearsay and speculation, perhaps look to people like Bill Gates when it comes to finances.
There’s a reason why he’s invested so much in farmland; below are just some of his notable investments.
Arkansas
One Bill Gates’ farmland purchase worth unpacking is the one in Arkansas, which spans 47,927 acres. The question still remains though, “Where in Arkansas is this Bill Gates farmland purchase located?” That’s a very good question. What is known about it is that it’s held through third-party entities.
While the mystery around this farmland continues, according to Forbes, it is reserved for conservation purposes. Considering Bill Gates’ recent works in the fight against climate change, one would expect him to invest in something aimed at sustainable agriculture, such as this particular farmland.
Louisiana
Another farmland worth looking into is the one in Louisiana, which spans 70,000 acres. Now, this one is used for something other than conservation. According to reports, it is used to grow the likes of soybeans, corn, cotton and rice. To me, this sounds like a smart move.
Not only is investing in farmland a portfolio diversification in itself, but diversifying within that asset class is a smart move too! Then again, we shouldn’t expect anything less from Bill Gates.
Washington
In Washington, Bill Gates has invested in more than 14,000 acres of farmland, but you’ll probably be shocked to find out that he may have contributed to your Happy Meal. A portion of the Washington farmland is used to grow potatoes. Some of these potatoes are used to produce the famous McDonald’s french fries, imagine that!
From the above, it’s quite clear that Bill Gates has given his farmland investment a lot of thought and has spread his net far and wide.
TL:DR – For Bill Gates, Farmland was a smart investment.
If you’re still asking yourself if you should invest in farmlands now, my answer is yes! It’s something I’m also taking a keen interest in, not only because of the long-term vision, but also because of the inflation protection it provides. After 2020, I’m pretty sure we could all do with some low-volatility investments and portfolio diversification.
