Posted by: davidgarnerconsulting | October 5, 2009

Forestry Investment – Some Valuable Information on Risk

There are many forestry investments to choose from all over the world.

You have the choice to invest in Teak, Robinia, Eucalyptus, Oak, Pine and many more.

There are also a lot of countries to choose from where to invest your money. From as far away as Panama, Indonesia or Malaysia, Paraguay, Costa Rica, Bulgaria but also in Germany.

You can choose from investing in a fund or direct investment.  Sometimes you will get ownership of your plot and trees, but most times you will not as you will own a lease on the land

There are of course some risks to consider as with all investments. The trees could be burned down by forest fires, catch a disease, storm damage may even break off the tops and branches of your precious trees. Most countries where forestry investment companies are active are poor and economically weak. Some are even politically unstable.

There are of course also good opportunities for a forestry Investment. There is an ever increasing demand for hardwood and the investment itself is uncorrelated to the rise and fall of stock, property and other financial markets. Wood harvested from Hardwood plantations also decreases the number of trees that have to be harvested from existing forests. These are just some of the advantages of a forestry investment over more traditional investments.

One of the major drawbacks is that it usually takes quite a long time to let the trees grow to a sufficient size. The bigger the tree, the more money can be made from harvesting it, that’s very clear.

The things to consider are;

  1. A good return on your investment
  2. A safe location for the plantation
  3. Insurance against fire and storm damage
  4. To minimise risk for investors by giving them ownership of valuable land
  5. To keep the investment term as short as possible, whilst still getting that good return.
  6. To use the whole tree as optimally as possible when it’s harvested, to maximize return.

Of course, these are all important points and usually hard to combine into one forestry investment.

For information and advice contact David Garner at davidgarnerconsulting@gmail.com

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