Investors are always looking for ways to invest that are associated with low level of risks. Most of the traditional asset classes like stocks, gold, bonds and real ester are associated with certain risks. They are adversely affected by factors like political unrest and economic downturns.
Unlike these asset classes, timber is a hard and tangible type of asset. Investing in timber is a long term investment and is associated with lower level of risks. Timber investments have caught the eye of investors who wish to enjoy attractive returns and also diversify their investor portfolio. Asset management companies like Ethical Forestry are encouraging investors to reap the benefits of timber investment.
Why Timber Investment?
Timber investment has a long life which provides a low-risk and stable way to investment. The high demand of timber has further increased the preference of this investment option among investors. Ownership and investment in timber can contribute to the financial security for the future generations. Investment in timber also offers a hedge against inflation. The most attractive features of timber investment are – security, diversification and stability. These features present an edge to timber investments over alternative investment options.
Timber as a Long-Term Asset:
Timberlands that are owned by non-industrial or private owners mostly form long-term investments which prove to be better hedge against inflation. They can significantly diversify an investor portfolio. The timberland property turnover and the resale rate are quite attractive and offer an insight into why the private investors are increasingly getting attracted to timber as an investment. The tenure of timber investments ranges from 7 to 26 years. Considering the volatility of financial markets, timber investment offers potential advantages and long-term benefits.
Risk-Adjusted and Continuous Returns:
Timberlands that are owned privately exhibit returns that are constant and risk-adjusted, over long-term as compared to other classes of assets like stocks and bonds. One of the reasons behind this fact is that timber, as an investment grows over time. Timberland, as an investment, calls for an investment on actual trees which are a renewable resource and continuously grow in value and size. The land involved in the investment, also is a finite resource which retains alternate value and uses.
Inflation Hedge:
Timber is an asset class that is increasingly becoming appealing to investors owing to the hedge against inflation offered by it. Corporate and individual; investors residing in Europe and Canada mostly own over 21.2 million acres of land in the U.S. Timber investments are not affected by price rises and inflation.
Apart from being an outstanding inflation hedge, timber investments are also not affected by any political problems around the world, or any economic ups and downs. They perform well even during economically difficult times, unlike the traditional investment options. These reasons have inspired investors to head towards investing in timber. There are several companies that handle and manage assets such as Ethical Forestry. These companies can guide you on how to proceed with investing in timber. With the constant returns offered by this investment option, it can prove o be good source of income.
Ethical Forestry 