Buying A New Tractor As A Hedge Against Inflation.

[npalen]

Could investment of cash in a new tractor be considered a long term hedge against potential inflation and worldwide financial uncertainty?
The tractor would be kept inside and used only sparingly and for hobby purposes. I realize that the rate of inflation is currently very low compared to the past.
I also realize it wouldn't have a lot of upside potential but, then again the same can be said for current interest rates on savings. Part of the "return" would be the pride of owning a new shiny tractor.

 

[4570Man]

If you need a tractor that is one thing. If you are trying to prepare for a market crash or hyper inflation I would invest in guns, ammunition, adult beverages, tobacco products, and toilet paper. You could trade for anything else. Just my two cents.

 

[Jarrod32]

I wouldn't look at it strictly as an investment as such. If you need/want a tractor to use, it is an investment that will (should) hold its value over time. But if that is your focus, you probably want to look to used tractors rather than new, as the initial depreciation is usually the steepest decline in value.

The Ford N series tractors, for example, seem to hold their value well over time. Another that comes to mind are the 1960s era John Deere tractors...think 4020 or 3020 models, for example. Buying a tractor like that now will likely hold its value for you.

But if you are looking strictly for an investment as an inflation hedge, stick with precious metals or real estate.

 

[/pine]

If you need a tractor that is one thing. If you are trying to prepare for a market crash or hyper inflation I would invest in guns, ammunition, adult beverages, tobacco products, and toilet paper. You could trade for anything else. Just my two cents.

Good answer IMO...right now you can buy a mid quality pistol an extra clip or two and box of 9mm etc.,etc...for less than a third of what an ounce of gold costs...In a SHTF scenario...the firearm and ammo will be greatly coveted...and be worth many times current values...

 

[4570Man]

Good answer IMO...right now you can buy a mid quality pistol an extra clip or two and box of 9mm etc.,etc...for less than a third of what an ounce of gold costs...In a SHTF scenario...the firearm and ammo will be greatly coveted...and be worth many times current values...

An a real SHTF scenario what is gold good for? Boat anchor? Any of the items listed above will be worth far more. And you can buy a whole lot more of it than gold or silver.

 

[/pine]

...what is gold good for?...

A coffee can full of Krugerrands makes a good door stop...:laughing:

 

[Jarrod32]

Seeking an investment as an inflation hedge is one thing. Precious metals are fine there.

Preparing for a SHTF scenario is another. And 4570Man's list above is a good start if you are going there. I would add such simple items as motor oil and dishwashing soap to a list of tradeable items.

Are you seeking a simple hedge against inflation, or preparing for a SHTF scenario? Two different issues. I was addressing the identified issue, a simple hedge against inflation.

 

[4570Man]

A coffee can full of Krugerrands makes a good door stop...:laughing:

Yeah, I have some lead blocks that make a pretty good door stop. If the need arises it can be converted into bullets. At its peak lead was bringing $1 per pound. It's down quite a bit now. Heck of a lot cheaper than gold.

 

[4570Man]

Seeking an investment as an inflation hedge is one thing. Precious metals are fine there. Preparing for a SHTF scenario is another. And 4570Man's list above is a good start if you are going there. I would add such simple items as motor oil and dishwashing soap to a list of tradeable items. Are you seeking a simple hedge against inflation, or preparing for a SHTF scenario? Two different issues. I was addressing the identified issue, a simple hedge against inflation.

I believe I would add some 4 and 20 pound propane canisters to the list. Some personal hygiene products wouldn't hurt either. Don't forget coffee and sugar.

 

[Looking4new]

Personally, I think you would be better off owning precious metals. ie. physical gold and silver. But that is me. A tractor is only worth as much as someone wants to pay for it. If the dollar goes for a dump and becomes worthless, gold and silver will become the currency.
Like I said, that is my opinion and sure as God made little green apples someone will jump all over my statement.

 

[4570Man]

Personally, I think you would be better off owning precious metals. ie. physical gold and silver. But that is me. A tractor is only worth as much as someone wants to pay for it. If the dollar goes for a dump and becomes worthless, gold and silver will become the currency. Like I said, that is my opinion and sure as God made little green apples someone will jump all over my statement.

I mostly agree, but I think bartering items would be more valuable.

 

[/pine]

There is a certain dichotomy between hedging and prepping...but with the current political aspects...firearms (and ammunition etc.) have become a unique cross-over commodity...the odds of value retention plus are very favorable...compared to something that requires fuel etc...
It's hard to think of other items that will retain their value and the demand...

 

[MinnesotaEric]

Could investment of cash in a new tractor be considered a long term hedge against potential inflation and worldwide financial uncertainty?
The tractor would be kept inside and used only sparingly and for hobby purposes. I realize that the rate of inflation is currently very low compared to the past.
I also realize it wouldn't have a lot of upside potential but, then again the same can be said for current interest rates on savings. Part of the "return" would be the pride of owning a new shiny tractor.

I think that we have the deflationary side of the business cycle ahead of us.

 

[ultrarunner]

Not sure about new tractors...

My boss bought a brand new Ford GT for a 160k in 2006... enjoyed the car immensely for 5 years and then sold for 210k...

I've done well with used equipment... Owned my Dozer for 17 years and got near what I had in it.

Even smaller things like a professional drain auger... had 5 years and used it about once a month... sold it for $100 more than I had in it.

So far... I have never sold a car for less than I paid... of course all but one of my cars were bought used...

My only concern with anything new is what if the electronics go bad... or affect reliability?

 

[TomSeller]

I think big brand tractors hold their original purchase but would not expect to gain much. Unless of course your wife is convinced they do and you need to keep her happy to get " approval".

 

[Cat_Driver]

Could investment of cash in a new tractor be considered a long term hedge against potential inflation and worldwide financial uncertainty?
The tractor would be kept inside and used only sparingly and for hobby purposes. I realize that the rate of inflation is currently very low compared to the past.
I also realize it wouldn't have a lot of upside potential but, then again the same can be said for current interest rates on savings. Part of the "return" would be the pride of owning a new shiny tractor.

Impossible to calculate. Example, you have the actual cost of the tractor and the actual cost of selling it some day - that's the simple math. Now try and calculate the cost of usage and the saving of using your tractor over the price or renting or hiring the work out. Now you've got the maintainance, fuel, insurance to deduct.

The two tractors I bought were Kubotas. The one I bought in 1986 was a DT 4500 used for $2,500.00. I sold it 30 years later for $8,000.00 - but used the HECK out of it. I bet I saved tens of thousands of dollars by not renting a tracor ot hiring a guy to do the work.

The second one I paid 18K new, 6 years later sold it for 18K 8 years later, my costs were a battery, fuel, oil, some coolant, filters, and that was it. In that case th tracor cost me nothing, and again saved me thousands of man hours and non rental costs.

 

[LD1]

One nice thing about tractor data is it lists the original selling price of quite a few tractors.

From old 8n's to ~1990's models all seem to sell for about what the original price was. But you look at a 10 year old tractor, condition is everything. In A+ condition with low hours...probably can get what you paid for it. 10 year old tractor with 1500 hrs and some wear.....not likely to happen.

The old ones...condition and hours are less important, as long as it runs good and looks decent.

 

[Farmer495]

Depends on what you buy. If you had bought a brand new Belarus 25 years ago for 20k and parked it in a climate controlled building and never used it, you could sell it today for 15k.

I'm with the "buy it, use it gently and consider it SAVING money and time" and know you can sell it for close to what you paid in the future.

 

[davesl708]

Personally, I think you would be better off owning precious metals. ie. physical gold and silver. But that is me. A tractor is only worth as much as someone wants to pay for it. If the dollar goes for a dump and becomes worthless, gold and silver will become the currency.
Like I said, that is my opinion and sure as God made little green apples someone will jump all over my statement.

In a total economic breakdown the only precious metal will be lead. Just look at Somolia and Syria. Gold and silver are not getting you much. Lead takes gold.

 

[Texasmark]

Years ago a worn out Ford n series went for $1600 with a worn out 5' rotary mower. Today they are advertising and I assume selling the same for $2750!