Investing during turbulent times can be a troubling experience. However, given that market volatility and ongoing inflation are almost guaranteed to continue in the coming year, investors worldwide are searching for novel strategies to shield their portfolios from potential danger. While rising interest rates and ongoing high inflation are projected to be the main economic drivers in 2023, there may be a chance to earn profit by investing in real assets. At Invest4Land, we specialize in agriculture investment in Turkey with our walnut farms in Turkey, providing investors with real assets for a secure addition to their portfolio.
Global Pressures and Market Volatility push Investors to Real Assets.
Foreseeing risks with precision is challenging, which presents a conundrum when allocating assets to hedge against risk. However, COVID-19 unquestionably illustrated the downfall of predicting market movements. In 2022, consumers’ top concern shifted to inflation as prices reached their highest levels in 40 years in June when the Consumer Price Index (CPI) skyrocketed to 9.1%. Even though inflation dropped to 7.1% in November, prices for necessities like food and housing are still rising. Some experts are concerned that we may see a resurgence of global inflation in the coming year.
In addition, the stock market had a terrible year in 2022, primarily due to rising inflation and the Fed’s retaliatory action. The Dow is down 8.15% for the year, the S&P is down 18.63%, and the Nasdaq is down 31.55%. In addition, the S&P Small Cap 600 was down about 18% for the year as of mid-December. As a result, many forecast that the stock market will remain unstable through 2023.
In light of this instability, investors need a strategy that accounts for how our economy is deflationary and overly leveraged. These strategies must go beyond the safe haven of equities and bonds and the tried-and-true 60/40 asset allocation, which diversifies risk by hedging against uncertainty. Although that has worked during the typical business cycle downturn, this traditional cycle has no similarity to what we’ve seen over the past year. With all this uncertainty, shrewd investors are turning to real assets as a more reliable addition to support their portfolios.
Why Real Assets are Best During Instability
Risk-averse investors can find solace in real assets because they can be utilized; they don’t merely reside on a computer screen and, as such, are inherently less volatile. Alternative real assets like infrastructure, real estate, and agriculture investment in farmland are all excellent options. Real assets offer several unique advantages during inflationary times. First off, these eras historically have seen more significant investment returns for real assets. From 2001 through 2020, real assets outperformed conventional investments during periods of rising inflation. Second, the nominal price of real assets has typically increased with time. Furthermore, real assets have consistently low or negative correlations to conventional stocks and bonds as well as to each other since they are not frequently subjected to speculative trading in public markets. Finally, real assets have a history of holding their value throughout the previous few decades, notwithstanding the impact of rising prices brought on by increased monetary supply.
Several long-term structural patterns that are advantageous to investors drive real asset returns. The demand for real asset commodities such as food and building supplies is still strong due to the expanding global population. However, the supply side is constrained because many of these resources are finitely available. Real assets are well-positioned to appreciate in value year after year due to this consistent supply-demand dynamic.
Notably, real assets are unlikely to face changes similar to those seen in the market. This is because the demand for many resources, such as housing, food, and energy, is inelastic. Regardless of the macroeconomic environment, it typically remains consistent throughout the year.
Agriculture Investment for Rewarding Real Assets
Concrete investments in real assets like farmland, in particular, make more economic sense from an investment standpoint as we continue into market uncertainty. Farmlands are something you can see, touch, and smell, as opposed to investing in shares of a firm that is receiving a lot of media attention or using more complicated tools like derivatives. As a store of value, farmland is more reliable than even gold and considerably more challenging to steal. Farm values have increased continuously in nominal terms aside from a decline in the 1980s, with only minor pauses in 2009 and 2016.
It usually takes a short while for most profitable enterprises to become outdated due to technology. Technology is the very thing that makes agriculture investment in farms a safer bet. A limited amount of arable land exists; thus, agricultural research and development must maximize its productivity. The aim of the most recent crop protection methods, crop protection chemicals, and farm management systems powered by artificial intelligence is to increase yields per acre. As a result of technology, the farm becomes more profitable over time, maintaining its role as a long-term store of value.
Secure your Real Assets with an Investment in Turkey
In the following 20 years, will other investments yield higher returns than an agricultural investment in Turkey? Possibly. But it’s difficult to predict what those may be in these turbulent times. A safe investment is an optimal option, given the risk profile of today’s economy.
If you’re seeking a historically reliable real asset during an uncertain economic climate, agricultural investment opportunities through Invest4Land show immense promise as a hedge against market unpredictability. You have access to this vibrant market through our ground-breaking agriculture investment strategy, allowing you to buy a farm in Turkey which is one of the highest-yielding asset classes in terms of risk-return. If you’re looking for an alternative agriculture investment that can offer consistent earnings, stability, and diversification, think about investing in walnut farms in Turkey through Invest4Land—interested in learning more? To start right away, contact our advisors.
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