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From Crypto to Farmland

When you make a high-risk investment, sometimes it pays off. That sounds like a good thing right? Well of course it is, the problem is when that happens human psychology steps in to trip you up… “Oh man maybe its going to keep going up!”, “I love this investment I want to keep it forever”, “What if I sell and then tomorrow it doubles, ohh I’d feel so stupid!”, “What if I sell and my friends don’t sell, then I’ll totally miss out!”, etc. etc. Professional investors recognize these emotions, they must fight these emotions. If you want to step up your investment game, you need to step back from your feelings and look at the situation, and with as much logic and context try to make a choice that you can look back on in the future and be okay with.

For many people including myself that is what is going on with Crypto. If you invested into almost anything crypto related more than a year and half ago, then you are sitting on some very large gains. In the crypto world they will say “Hodl forever!”, “to the moon!”, “100X from here!”, ehhh no thank you. I’m not saying that there isn’t a decent chance that holding will not be the best option for a very long-time, it certainly has been for the last 10 years but, we all need a little humility. I don’t know what the future holds, I have very high conviction in Crypto and how it will change the world, but you just never know what the future holds. So, if that is my view, that means I need to take some (not all) profits along the way, diversify my portfolio and be okay with that even if the market continues to go up up up! Which it probably will over the long-term.

As a wise man once said to me, “Concentrate to get rich, diversify to stay rich.” In other words, if you get a windfall, pack some of that away for a rainy day!

So what am I looking at? Well, I’m worried about inflation long-term, I like things that are scarce, irreplaceable, and needed… Farmland! Talk about going from the tip of the spear to the shaft, the height of risk, to something as old as time, from digital scarcity to the most physical of assets there is.

I have been following a group called Farmtogether. They are a relatively new investment firm, that allows individuals to invest in different farms all over the United States. Every few weeks they have a new offering, usually it centers around the crop the farm produces, apples in Washington, almonds in California, soy and wheat in Illinois. Some of the farms are turnkey with lower expected returns (7% IRRs) others have more of a business plan with the risks associated and run in the 10% to 15% IRR range. The firm appears to run by a professional group of people with experience in the agricultural industry.

This firm has got me emotionally engaged. I love the idea of recycling some of my crypto gains into firm solid earth producing the food that we all need, there is something very poetic about it. That being said, my professional investor instincts have been perking up, “You like this a little too much”, “You need to think about the risk here as well as in crypto”, “This firm does not have a track record to point to yet”, “This is a long-term commitment.” So for now I’ve only dipped my toe into a few of their offerings (again diversification). I’m excited to see how they grow and develop, and I hope their returns and forecasts pan out as they estimate so I can invest even more in the future!

As a side note, a big side note, in order to invest with this group you need to be an accredited investor (see definition). So, for those of you who are just starting out on your personal finance journey this maybe a couple levels beyond where you are at right now. But the idea of taking some gains and diversifying still holds. For those of you who might still qualify, do your own research of course, but it is a very interesting prospect for diversifying your portfolio.

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