Forestry Investment – Investment experts on money site Motley Fool claim that investing in timber can prove a wise move for people who want to diversify their portfolios.
A number of larger investment institutions have recently begun to invest in timber and related products. Reasons for this are tax advantages to investing in forestry, including no capital gains tax and the fact that trees do not need to be harvested at maturity if prices are not at their best. This makes forestry investment a flexible option.
The Investment Property Databank has produced a UK Forestry Index since 1992, which shows that forestry offered better returns than equities or bonds after a 3-year and 5-year investment. Annual returns on timber investment have reached as high as 19.3 per cent, according to the data.
In terms of gaining exposure to this asset class, Motley Fool recommends investing heavily to reap the best benefits of timber investment. In addition, investors get to own their own slice of forest.
Forestry investment is also a strong option in terms of its environmental credentials as timber is a major source of alternative energy and is at the centre of exciting developments in the production of bio-fuels.