This paper examines the relationship between wealth, weather risk, and the composition and profitability of agricultural investments in low-income rural areas. The authors use unique panel data from rural India on investments, wealth, and rainfall to analyze how farmers' asset holdings vary based on their wealth levels and weather risk exposure. They test the hypothesis that there is a positive association between the average returns to individual production assets and their sensitivity to weather variability, a key feature of an investment equilibrium characterized by risk-averse agents. The study also explores how the influence of weather risk on asset portfolios and farm profitability varies with measured risk preferences and total wealth holdings. The theoretical framework presented in the paper incorporates the distribution of weather outcomes and assumes that farmers choose asset portfolios based on their risk preferences while maximizing profits after resolving uncertainty. The empirical analysis uses data from the ICRISAT Indian village surveys, which provide detailed information on agricultural production, investments, and weather over a period of up to ten years. The results reject the hypothesis that the composition of agricultural investments reflects technical scale economies but support the hypothesis that asset portfolios are influenced significantly by farmers' aversion to risk. The study also indicates that the trade-off between profit variability and average profit returns to wealth is significant, with less wealthy farmers bearing a higher cost of risk mitigation, leading to lower average incomes and increased income inequality. The paper concludes that while wealth-equalizing land redistribution could increase average profitability, it may be less efficient than improving access to consumption credit or other forms of insurance. The findings suggest that farmers in the top quintile of the wealth distribution do not experience a significant reduction in the measured riskiness of their investment portfolios or profits in response to increased risk, indicating that risk aversion is a key factor in shaping investment behavior.This paper examines the relationship between wealth, weather risk, and the composition and profitability of agricultural investments in low-income rural areas. The authors use unique panel data from rural India on investments, wealth, and rainfall to analyze how farmers' asset holdings vary based on their wealth levels and weather risk exposure. They test the hypothesis that there is a positive association between the average returns to individual production assets and their sensitivity to weather variability, a key feature of an investment equilibrium characterized by risk-averse agents. The study also explores how the influence of weather risk on asset portfolios and farm profitability varies with measured risk preferences and total wealth holdings. The theoretical framework presented in the paper incorporates the distribution of weather outcomes and assumes that farmers choose asset portfolios based on their risk preferences while maximizing profits after resolving uncertainty. The empirical analysis uses data from the ICRISAT Indian village surveys, which provide detailed information on agricultural production, investments, and weather over a period of up to ten years. The results reject the hypothesis that the composition of agricultural investments reflects technical scale economies but support the hypothesis that asset portfolios are influenced significantly by farmers' aversion to risk. The study also indicates that the trade-off between profit variability and average profit returns to wealth is significant, with less wealthy farmers bearing a higher cost of risk mitigation, leading to lower average incomes and increased income inequality. The paper concludes that while wealth-equalizing land redistribution could increase average profitability, it may be less efficient than improving access to consumption credit or other forms of insurance. The findings suggest that farmers in the top quintile of the wealth distribution do not experience a significant reduction in the measured riskiness of their investment portfolios or profits in response to increased risk, indicating that risk aversion is a key factor in shaping investment behavior.