Land for Your Portfolio

If you’re looking to invest in farmland or timberland, there are benefits (and limitations) you should consider.

Land for Your Portfolio image

AFTER THE PAST FEW YEARS of turbulence in the securities markets, shifts in the political environment and concerns about inflation, many investors are renewing their interest in tangible assets. Enter land ownership, one of the oldest forms of wealth creation and preservation.

These real assets—including farms and forests—may offer potentially attractive returns, with income streams that have relatively low market volatility. The prices of the commodities these parcels of land produce do not tend to move in sync with the prices of stocks and bonds, which may help to reduce a portfolio’s overall volatility. Additionally, unlike fixed-income investments, farmland and timberland prices aren’t typically affected by interest rates. That’s because land is permanent and generally appreciates over time notwithstanding the direction interest rates move.

These real assets may offer potentially attractive returns, with income streams that have relatively low market volatility.

Acquiring U.S. farmland and timberland also helps provide portfolio diversification and may offer a strategy to assist with capital preservation. “Clients continue to seek to preserve capital as much as they seek to grow it, and land has often been a very solid preservation vehicle,” says Dennis Moon, from the Specialty Asset Management team at U.S. Trust, which manages and assists clients with direct investments in farm and timberland.

The market may present investors with a prime buying opportunity as more farmland comes to market in the near future. Seventy percent of U.S. farmland is owned by farmers, who are now 58 years old on average, according to the U.S. Department of Agriculture’s 2012 Agricultural Census. Over the next decade much of America’s farmland will be held or farmed by the boomer generation as they transition into retirement. Many of them will sell outright. Others will want to sell their land and then lease it back to farm it for a few more years. With lower overhead, they’ll be in a better position to grow their savings and retire in different locations if they so desire.

Owning farmland and timberland may present an opportunity to educate future generations about investing, the environment and the global economy. Plus, it provides an actual place where families can visit and build memories.

Investors may be looking at a prime buying opportunity as more farmland comes to market in the near future.

Meanwhile, as concern grows over access to natural resources such as water and food, investors are drawn to forests and arable land to pass on to their children and grandchildren. Timberland, in particular, is a valuable legacy asset. The rising generations can watch trees literally grow and become more valuable until they decide to harvest them.

READ THE FULL VIEWPOINT

A private wealth advisor can help you get started.

Find an advisor

The opinions, assumptions, estimates and views expressed are as of the date of this publication, are subject to change, and do not necessarily reflect the opinions and views of Bank of America Corporation or any of its affiliates. The information does not constitute advice for making any investment decision or its tax consequences and is not intended as a recommendation, offer or solicitation for the purchase or sale of any investment product or service. Before acting on the information provided, you should consider suitability for your circumstances and, if necessary, seek professional advice. The investment or strategies presented do not take into account the investment objectives or financial needs of particular investors. It is important that you consider this information in the context of your personal risk tolerance and investment goals.

The information presented here is not intended to be a specific offer to sell or provide, or a specific recommendation to buy, any particular product or service.

Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax or accounting advice. Always consult with your independent attorney, tax advisor, investment manager, and insurance agent for final recommendations and before changing or implementing any financial, tax, or estate planning strategy.

Alternative investments are intended for qualified and suitable investors only. Alternative investments involve limited access to the investment and may include, among other factors, the risk of investing in derivatives, using leverage, and engaging in short sales, practice which can magnify potential losses or gains. Alternative investments are speculative and involve a high degree of risk.

There are special risks associated with investment in commodities, including market price fluctuations, regulatory changes, interest rate changes, credit risk, economic changes, and the impact of adverse political or financial factors. Nonfinancial assets, such as closely held businesses, real estate, oil, gas and mineral properties, and timber, farm and ranch land, are complex in nature and involve risks including total loss of value. Special risk considerations include natural events (for example, earthquakes or fires), complex tax considerations and lack of liquidity. Nonfinancial assets are not suitable for all investors.

Exchange Traded Funds are subject to risks similar to those of stocks. Investments returns may fluctuate and are subject to market volatility, so that an investor’s shares, when redeemed or sold, may be worth more or less than their original cost.

Investing in real estate securities, such as REITS, can be subject to fluctuations in the value of the underlying properties, the effect of economic conditions on real estate values, changes in interest rates, and risks related to renting properties, such as rental defaults.

Investments focused in a certain industry may pose additional risks due to lack of diversification, industry volatility, economic turmoil, susceptibility to economic, political regulatory risks and other sector concentration risks.

Merrill Lynch makes available products and services offered by Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S) and other subsidiaries of Bank of America Corporation (BofA Corp.).

The Private Banking and Investment Group is a division of MLPF&S that offers a broad array of personalized wealth management products and services. Both brokerage and investment advisory services (including financial planning) are offered by the Group’s Private Wealth Advisors through Merrill Lynch, Pierce, Fenner & Smith, a registered broker-dealer and member SIPC, and other subsidiaries of Bank of America Corporation.

The banking, credit and trust services sold by the Group’s Private Wealth Advisors are offered by licensed banks and trust companies, including Bank of America, N.A., member FDIC, and other affiliated banks.

Certain U.S. Trust associates are registered representatives with Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”) and may assist you with investment products and services provided through MLPF&S and other non-bank investment affiliates. MLPF&S is a registered broker-dealer, Member of SIPC and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”). U.S. Trust operates through Bank of America, N.A., member FDIC, and other subsidiaries of BofA Corp.

Related Content:

1 of 1

Investment, insurance and annuity products:

Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value
Are Not Deposits Are Not Insured by Any Federal Government Agency Are Not a Condition to Any Banking Service or Activity

Investing involves risk. There is always the potential of losing money when you invest in securities. Past performance does not guarantee future results. Asset allocation, rebalancing and diversification do not guarantee against risk in broadly declining markets.

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

This material is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory (including financial planning) and other services. Additional information is available in our Client Relationship Summary. 

This material does not take into account a client’s particular investment objectives, financial situations, or needs and is not intended as a recommendation, offer, or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory (including financial planning) and other services. There are important differences between brokerage and investment advisory services, including the type of advice and assistance provided, the fees charged, and the rights and obligations of the parties. It is important to understand the differences, particularly when determining which service or services to select. For more information about these services and their differences, speak with your Merrill financial advisor.

Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S” or “Merrill”) makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation (“BofA Corp.”). MLPF&S is a registered broker-dealer, registered investment adviser, Member SIPC and a wholly owned subsidiary of BofA Corp.

Merrill Private Wealth Management is a division of MLPF&S that offers a broad array of personalized wealth management products and services. Both brokerage and investment advisory services (including financial planning) are offered by the Private Wealth Advisors through MLPF&S. The nature and degree of advice and assistance provided, the fees charged, and client rights and Merrill’s obligations will differ among these services. Investments involve risk, including the possible loss of principal investment.

The banking, credit and trust services sold by the Private Wealth Advisors are offered by licensed banks and trust companies, including Bank of America, N.A., Member FDIC, and other affiliated banks.

Trust, fiduciary and investment management services, including assets managed by the Specialty Asset Management team, are provided by Bank of America, N.A., Member FDIC and wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”), and its agents.

Bank of America Private Bank is a division of Bank of America, N.A.

U.S. Trust Company of Delaware is a wholly owned subsidiary of Bank of America Corporation.

Insurance and annuity products are offered through Merrill Lynch Life Agency Inc., a licensed insurance agency and wholly owned subsidiary of Bank of America Corporation.

© Bank of America Corporation. All rights reserved.

Patent: patents.bankofamerica.com

ARXQTD37-EXP-2018-02-23