Despite being the most dynamic and rapidly evolving (socially and technologically) species on this planet, we are also creatures of habit. When we get “set into our ways,” it’s very hard for us to change and reorient ourselves. This is apparent in several things, even in investments. Most investors are set in their ways.
If they have a lot of capital, they might consider real estate, one of the oldest and most trusted investment assets. Since a relatively smaller proportion of investors have that kind of funds, most go for stocks. When they are feeling conservative, they either keep cash and accumulate interest or buy bonds.
But that’s a very limited way of thinking about investments. There are several other ways to get rich, which most people don’t even consider.
Farmland Many investors, especially those born and raised in metropolitan areas who aren’t accustomed to the rural lifestyle and don’t even consider investing in farmland as an option. But the fact is that farmlands make for an amazing investment opportunity and a multitude of reasons—the first reason is the returns you can get, which most investors understand.
Between 1988 and 2018, the average price-per-acre of farmland rose from $464 to over $3,000 ($3,122, according to Statistics Canada). That’s around 6.7 times growth in three decades. When converted to a compound annual growth rate (CAGR), it results in 6.56%, which is much better than most dividend-based portfolios’ returns. And even though it’s not as powerful as stock returns through capital appreciation, it’s significantly safer.
The value of farmland increases slowly and gradually, and it’s not affected by the broader market, real estate, and even the economy. Value appreciation is just one way of making money through farming. You can rent the land out to farmers, build a ranch, or find another conventional use to “milk” more out of your farmland.
Or you can try something new like organic vegetable farming. You won’t need a lot of land for that, and you will need to get regulated, but if you can put in the work (or your manager can), it can offer great returns in a niche market.
Small business Just as there are different types of assets you can invest in, there are also various things you can invest in a money-making endeavor. Cash isn’t the only investment that can help you get rich. Time, energy, research, creativity, and discipline are all the things you can invest in order to get rich. If you compare cash on cash returns, a small business, even a side business, can earn you more than two to three times what investing in stocks can.
The main cost here is the time and effort you need to put in. But in today’s tech-heavy world, there are so many new ways to make money that almost anyone can find the perfect niche for themselves. And doing what you love or what you are good at will bring down the “effort” cost-of-investment significantly down.
Foolish takeaway These two aren’t the only investment assets beyond stocks. You have collectibles, crypto, peer-to-peer lending, etc., as well. This is just to give you an idea about the different ways you can use the money to make more money.
This is essentially diversification but on a completely different scale. Just like stocks, you have to do your due diligence. And with research and effort, some of these ways might help you get rich much faster than stocks could.
The post 2 Ways to Get Rich That Don’t Involve Stocks! appeared first on The Motley Fool Canada.
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