Forestry investors might not be aware of it, but they are boosting sustainability. Forest research experts around the world are of the opinion that the rising interest in alternative investments like ethical forestry are helping in shining the spotlight on sustainability across the world. Most investors, even seasoned ones, are completely disillusioned with the state that the economy is in.
This is not an isolated situation in a particular country, but more of a global one. Investors everywhere are seeking means of engaging their wealth in more meaningful ways that will also bring in more profits. The stock market used to be a gravitation point for investors and they would be driven by the occasional windfall that was showered on them, but then the downfall came and many investors ended up losing large amounts of money.
Good Anchoring
This is what drove them to look for investments that would be rooted on firm ground- and what better investment than one that actually stands on the ground and flourishes and grows on it. Ethical forestry investments are becoming a chosen avenue for numerous investors as it is a very low-risk proposition. As long as investors zero-in on the right forestry company, their investment will be safe. This is a long-term proposition and is an excellent opportunity for investors large and small. Institutional investors have always shown interest in land and forestry and now, individuals are too.
Low Risk
Timber investments are less-risky because investors do not have to harvest and sell their timber until the price is right. The trees can continue to grow and increase in value and be harvested when the demand and prices are high. Today, there is an immense demand for timber across the world, in developed and developing economies. Emerging markets like Brazil, China and India have shown a spurt in demand over the last few years and there is no indication that this trend is going to change anytime soon.
The Reliability Factor
Timber investments through reliable companies are an ethical and profitable choice. On an average, there has been a 5% rise in the price of timber, annually over the last century and timber tends to perform better even when the economic climate is not conducive for growth in other investments. The only thing that investors should be aware of is that forestry is an illiquid investment. Interim returns come in whenever the plantations are thinned, but investors make real profits when the fully-mature trees get harvested.
It takes around 10-15 years for the trees to mature fully. This makes forestry a perfect investment for those who are seeking diversification of their portfolio. It helps in preserving wealth in the long term. Investors should research ownership of the land and the owners of the projects should be able to show very clearly defined, long-term, un-contested land tenure leasing rights. As long as investors are patient and are looking for long-term profitability, forestry investments can be a very good option for complementing their existing portfolio.