Forestry Investment – Structured Investment Vehicles
Due to the availability forestry investment options, many investors are now investing their hard earned cash in this industry.This is because this asset class reduces risk while at the same time it outperforms more volatile equity industries. The last fourteen years, stock investors have not only tried to maintain investments in the stock market, but they have also been facing huge losses for about four years. In contract to this, forestry investment has shown tremendous growth and profit for a long time now. Investors who want to venture into this line of business need to understand that there are standard investments methods they need to incorporate for them to flourish. For this reason, this article will highlight some of these investment vehicles that make forestry investment option available to the investors.
First, an investor should buy the lease to a piece of forestry land, and then look for a company that will grow, harvest and sell the type of trees the investor wants to plant. Although this looks simple, this investment method leaves many questions unanswered. For instance, they have to figure what which is the best place to farm, the kind of trees to grow that will be worthwhile, and who is going to manage the land once it is bought.
Apart from these questions, there are other aspects that investors need to put into consideration like the capital, where to find the land to grow the trees, who will purchase the wood once it is ready for harvest, what rate will the investor sell the wood at and what hindrances the investor will face in this investment.
As an investor, you should not worry about who is going to purchase the timber harvested in your plantation as many timber manufacturing companies will be interested in buying wood from you.In some instances, these companies will enter into an agreement with you to plant trees on their behalf and at an agreeable price.If you wish to enter into an agreement with these companies, the rate that you want to settle on with the company should be dependent on the type of trees that you want to plant for timber, the location of your plantation and the quality of wood you expect the trees will produce.One advantage of negotiating timber prices in advance is that it helps you caution yourself against price changes in the future.
Lastly, get ready to deal with natural disasters such as fire outbreaks if you have decided to invest your money into forestry. Nevertheless, this seldom occurs and if it does, then the insurance company will compensate you in case you insured your forest investment against natural disasters.