Cheap Land Investments
The definition of cheap land investments would be tracts of rural acreage purchased for a few hundred dollars per-acre. Such properties would be located in the “middle of nowhere” in several of the large Western states: Wyoming, Texas or South Dakota. Cheap land investments are often overlooked but can be very exciting and financially rewarding.
Other than their homes, the most common assets held by Americans today are bank accounts and stocks. First, let’s discuss the safety factor – how safe is cash in banks and how safe are stocks? For the most part cash in banks is very safe as these deposits are insured by the federal government. Regarding stocks, they can go up, go down and go bust, wiping out stockholders. Simply consider the fate of General Motors, one of the most popular stocks of all time.
Next, let’s review the investment performance of both cash and stocks over the last quarter of a century, or 25 years. According to the U. S. Bureau of Labor Statistics it takes $2,028 in 2010 to purchase the same goods and services that $1,000 purchased a quarter of a century earlier in 1985. Thus over the last 25 years inflation has robbed the dollar of approximately 50% of its purchasing power. In 1985 the Dow Jones first broke the 1,500 barrier and today it is around 10,000, or 7 times higher than in 1985.
How safe are cheap land investments and what has been the historical performance for this type of asset? Cheap land investments are very safe because raw land can’t be stolen, can’t be outdated by technology, can’t be mismanaged, can’t be destroyed by fire and most important of all no more land can be made. Land is a finite commodity and among all assets is the only one certain to still be here in future years. In 1985 the cheapest land for sale in the United States was in the $10 per acre range and today, 25 years later, the cheapest land listed for sale is $178 per acre, or 17 times higher than in 1985.
There are various investments that can make substantial sums of money in a fast period of time such as large scale stock operations, commodity speculations, oil and gas wildcatting, sophisticated hedge fund activities and foreign currency trading. All of these, however, require huge sums of money and specialized knowledge and even then catastrophic losses can occur. In these financial ventures the human factor is involved and there are no guarantees of success or assurances that the asset will even exist in the future.
On the other hand there is a 100% guarantee that land will still be here in the future, and history has proven that it is lvirtually impossible to lose money owning cheap land if purchased cheap enough and held long enough!
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