I Have Money to Invest What Should I Do – Choosing the Right Investment for You

From the point of view of someone who is willing to take some risks, if I have money to invest, what should I do?

Being in a situation where you have some money to invest, and you are fortunate enough to be able to take a few risks, there are so many different options available to you that you could spend a lot of time just going through the information pamphlets and websites of investment opportunities that fit that bill.

What kind of person can afford to take risks with their investments though? Probably someone who is still very young, relatively debt free or completely debt free, has more money coming in than what their expenses take up, or they are older but have a comfortable flow of income and have built up some money to play with that they wouldn’t regard as a crisis if they lost the money.

Whatever your reason, for wanting to get into higher risk investments, it is a very nice situation to find yourself in.

We will now get into exactly what it is you can do in order to get into these types of investments…

Although we have established that the discussion will be focused on higher loss investments, it must be said that no investment portfolio should be completely filled with high loss investment assets. Any reasonable investment portfolio should comprise out of the three risk classes of investment, namely, low-risk investments, which are slow in capital gains but are much more stable and in some cases up to 99% guaranteed.

Medium risk investments, which have faster gains but are more a mixture of high loss investments and low loss investments. Medium risk investments are a favorite for many people since they usually come with emergency exit plans which minimize any rare losses.

We will assume then that everybody seeking to enter the higher loss investment market is doing so with the portion of their investment fund allocated to the high risk category and not those who are putting all their money into this category.

Now for the exact endeavors, in the high risk category, which suitors can invest in…

Money that you put into high risk investments is money you are willing to lose, so if you are not willing to lose that money, it should go into the medium-to-low risk investment category.

Firstly, gambling (legal gambling), like at the casino is high risk. In some cases you have a fifty-fifty chance of either doubling your money or losing all of it, but this is not advisable. Gambling is the fastest way to make money but it is also the fastest way to lose money and it is only mentioned so as to ensure the information is complete.

Secondly, trading. While the entire process of trading can be approached as a long term investment, if it is to be classified as high risk investment, trading refers to short term positions with results that fluctuate very quickly.

This includes the likes of Forex, where you buy and sell currency according to what you think the value of the currency will do, short selling, where you sell stocks with the promise of buying them back later in anticipation that they will drop in value and even short term shares trading.

Generally, high risk investments can have great returns if things go right for you, but they can have adverse losses if the shoe comes on the other foot, so it should be reiterated that if you are to go into high risk investment, it must be with money you are willing to lose.

Farmland Investments in Africa – Can They Be Both Profitable and Sustainable?

As global stock markets fluctuate wildly, individual investors, private equity funds and other large institutions are increasingly looking to alternative investments to provide balance and stability to their portfolios.

Given the rapid run-up in agricultural commodities and food prices recently, farmland investments are becoming an increasingly attractive asset class. For both institutional and individual investors with long time horizons, agricultural land is an ideal method for diversifying beyond a portfolio of purely stocks and bonds, whilst also providing a steady stream of good dividend income and offering excellent upside potential for capital gains due to the ongoing agricultural “super cycle” as coined by noted farmland and commodities investor Jim Rogers.

In the UK for example, over the last ten years, agricultural land has appreciated roughly 13 per cent per year in the according to Investment Property Databank (IPD). The US and other Western countries have seen similar farmland investment returns. Farmland prices have therefore skyrocketed, reaching as high as £17,300 (approximately $30,000) per hectare in the northwest of England to take just one example.

As a result, investors are increasingly turning their interest in agricultural land investing to areas of the world where farmland prices are starting from a much lower base, thereby providing much greater upside potential. One area where this has been particularly prevalent is Africa, where hedge funds and other large institutions have been making large agricultural farmland investments. Hedge funds and private equity funds alone have purchased 148 million acres of farmland in just the last three years. Just to take one example, the UK’s well known Guardian newspaper just outlined how major a full 5pc of African agricultural land had been purchased or leased by outside investors, and that more than 200m hectares (495m acres) of land – roughly eight times the size of the UK – were sold or leased between 2000 and 2010.

Given the long history of colonial exploitation in Africa, there has been increasing resistance to what is perceived by many western Non-Governmental Organisations as well as Africans as a “foreign land grab.” Whilst some of these feelings may be based on old stereotypes rather than current conditions, there is no question that some abuses have occurred. Just to take one example, farmlandgrab.org just published an article arguing that a US firm was running roughshod over the local population in Cameroon with one of its agriculture investment.

It is undoubtedly true that frequently large institutional investors make deals directly with the central governments of African countries. Given the amount of corruption and generally poor governance that still exists in Africa, the investment capital frequently disappear into the pockets of corrupt local officials whilst local farmers are forcibly removed from their homes and lands.

By the same token, it is far from true that all foreign investments in African farmland are predatory and exploitive. Global consultancy McKinsey recently produced a report on the future of Africa which noted that the continent had over 25 per cent of the globe’s arable land yet produced only ten per cent of agricultural output. McKinsey argued that up to $50bn/year of African agricultural farmland investment would be needed to bring the sector up to global standards and allow African agriculture to maximize its potential output.

One reason to consider outside investments in African farmland is that the amount arable land globally has been decreasing. As farmland continues to be lost to urbanization, transportation networks and real estate development, the world must try to feed more people on less farmland. Africa, however, holds approximately 60% of the world’s remaining uncultivated land that is suitable for farming, so looking at food security from a broader perspective, Africa has a an opportunity to feed both itself and the world in the coming decades.

Given the need for investment in African agriculture, there is no reason that foreign farmland investments on the continent cannot be structured as a win-win for both private investors and the host country populations. With the right guidelines and intentions, foreign investment in African farmland can be both ethical and profitable. The major issue is whether a set of basic principles for “win-win” farmland investment in Africa can be developed. Just as an example, we believe that the following principles can be used to evaluate the fairness of foreign farmland investment in Africa:

1. The investment was directed at completely unused land, and none of the local population has been removed from any of the land since it was not in use as a food source;

2. The farmland investment was negotiated directly with local villagers and tribal chiefs, so there was no chance for corruption at senior government levels;

3. Farmland investments in developing countries should not simply be premised on food security concerns by the foreign investors, who may want to simply ship the entire crop production back to their home countries;

4. The workforce should as much as possible be local hires who should be paid a fair wage well above the minimum for that country; and

5. Finally, foreign investors in African farmland should also have at least some kind of community re- investment programme in the host country.

Whilst these principles will not solve every concern of local African NGOs, they are at least a starting point for considering examining whether a farmland investment is structured as a win-win for both the investor and the local population, or if the investor is behaving in an inherently exploitative manner. One other interesting factor is that when farmland investment projects are structured such that retail investors can participate, we have seen that these types of individual investors demand that any project they are involved with be both ethical and profitable.