Financial website The Motley Fool has recommended forestry investment as a means of diversifying one’s investment portfolio (Touch Wood – It’s a Good Investment).
It uses evidence from several sources, including the Investment Property Databank’s UK Forestry Index, which shows that forestry produced strong annual returns, up to 19.3 per cent for some shorter investment periods.
The site adds that several large institutions have begun to invest in forestry over the past few years as the asset class has gained a reputation for a flexible, profitable investment option.
Tax benefits including no capital gains tax are among the advantages to investing in forests. Others include the fact that it is an environmentally sound investment providing the forestry is sustainable, and the advantage of being able to hold onto mature trees, allowing them to continue to grow instead of harvesting them if the economy, and therefore timber prices, are low.
This attribute – forestry’s relative strength against economic downturn – has led to a boom in interest in the asset class since the global recession set in.
Motley Fool says that experts often recommend investing heavily in forestry, with deposits of at least £200,000 to generate the very best returns from the investment. However, there are much more affordable options available to those who want to invest in a forestry-related fund.
Many also offer the chance to own an identified piece of woodland. Other see investors putting their money towards sustainable development of forests in countries like Brazil, Costa Rica and Uruguay in order to harvest the trees to develop renewable energy.