Many investors shy away from invest in agricultural commodities because of the misconception that agriculture is a risky venture. However, whether the venture is risky or not really does not lie in the sector, but more on the investor himself. Agricultural investments have its defined risk and benefits. It will indeed be very risky if one were to invest in low quality land. However, the case if very different if we were talking about prime investment grade farmland which provides stable and consistent returns while appreciating the principle.
The United States Stock Exchange GSCI agricultural commodities index rose by 30% on an average, with wheat and rice prices hitting record high level prices as a result of increasing demand and dwindling supplies. In comparison, the US stock market had relatively low returns with the S&P increasing by a mere 7%, while the NASDAQ was up 10% for the year. The huge disparity in performance returns between the agricultural commodities and stocks is a good reminder to investors to value the concept of diversification.
Gold is bought and sold all over the world, and it is considered by many to be a safe investment, because it's tangible. However, despite its overall value, world market prices for gold fluctuate, and the goal is to buy low and sell high.