4 ms·
What you're describing isn't specific to farms. If you take out a fixed-rate loan, you'll benefit from increases to inflation (since it makes the inflation-adj
by smeyer 6y ago
What you're describing isn't specific to farms. If you take out a fixed-rate loan, you'll benefit from increases to inflation (since it makes the inflation-adjusted interest rate lower). This is true whether you use that loan to buy a farm, a house, gold, et cetera.
Other than the loan, it makes sense to work in real dollars (inflation adjusted) not nominal dollars (non-inflation adjusted). In real dollars, you $300k farm doesn't change in value and your income also doesn't change. In real dollars, gold (in your example) also doesn't change.
Gold is a poor and weird investment for a variety of reasons, but it's not like farms are magically better than other asset classes (like regular old stocks).
- eej71 6y agoPerhaps I'm deeply misinformed, but as a hedge against a modest amount of regular inflation, stocks generally perform quite well over the long term - especially when compared against other asset categories.
- milesvp 6y agoYou’re not misinformed. This is kind of a weird thread. Generally, if you want to hedge against inflation, you buy anything but dollars. If you want a very safe hedge against inflation you buy US government bonds. They are considered the lowest default bond, and as such will generally be priced at expected inflation. Next up, if you want about 1% above inflation (and the associated risk) you go with corporate bonds. And if you want about 3%, and more risk, you go with stocks. Generally you should know the higher the interest the greater the risk. Some of the risk is short term risk, like not being able to liquidate. Some of the risk is longer term, like a company becoming insolvent. To get good returns from the stock market, you need diversity, and long time lines, and growing companies. Else luck.