Agricultural commodities, a hedge against inflation

We all try to increase the value of our assets by selecting an appropriate portfolio and investing in good choices of different goods.

The effect of inflation leads to instability in profit and return on investment. The effect of inflation on the dividend payout ratio is unknown. So, investors whose net interest rates depend on the rate of inflation are trying to benefit from the effects of inflation by investing in efficient activities while maintaining the value of their assets. The effect of inflation on different capital goods is different, so three basic groups of assets can be referred to:

  • Stocks

The increase in inflation affects the value of each share in general and reduces it, as businesses will lose a portion of their interest due to the increase in costs.

  • Real state

When the economy experiences higher inflation, the real estate seems to act as a barrier against inflation and investors will fill their portfolio with varying degrees of assets, including real estate. Although the return rate can be higher, the length of the planning period for this investment is longer.

  • Commodities

The commodities can be represented in the stock market, or are outside the stock market class and the stocks market. One of the kinds of goods, which can be clearly counted, consists of raw agricultural goods. The portfolio involving the raw agricultural commodity reduces the risk of investment and acts as a good barrier against large inflations and prevents the investor’s asset devaluation. Moreover, this investment has other special features:

  • Demand for it is often constant and even incremental, even in difficult economic conditions such as global crises, pandemics and so on.
  • Shorter duration of capital efficiency with the relative profitability of capital versus inflation.
  • Having a diverse portfolio.

The sum of these factors makes this investment a desired and desirable issue between micro and macro investors to preserve and increase the value of their assets.

Although many of the raw agricultural commodities are marketed on the stock markets, investing on them through a pre-purchasing mechanism outside the stock market, is a new issue that FortuneBerry made it possible.

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