Investing In Hardwood Can Me More Beneficial Than Other Invest Options
Investors around the world have turned to timber or hardwood investments over the last couple of decade
. The main reason why these investments are so popular is that the hardwood industry has developed in the 21st century. Investing in trees is worthwhile also because they provide consistent returns. A Forest Society study found in 2008 that every U.S. consumer product uses enough paper to cover 100 feet of lumber. Economists have found that the value of timber investments exceeded inflation by 3% per year 1905-2005. Investors also can expect returns of 12.88% from timber investment compared to 10.54% from other investments in the S & P 500 on the basis of a study between 1990 and 2007. Mixing a reliable market for timber and improved performance compared with other populations make these vital investments for a portfolio.
Consumers directly investing in the timber industry can make investments at the beginning, middle and end of timber cultivation to keep dividends constant. A final reason why investors are looking at the timber industry for investments for their portfolios is the appreciation of timber lands. The constant demand for paper products, wood furniture and other timber products means that timber and timber lands are appreciating assets.
Hardwood Investments offer good short term literal growth. The term of these type investment start from 7 years, where you buy already half grown trees to seedling investments for up to 20 years. Depending on the species harvesting usually starts after 5 years and so returns are paid after that.
Many species are available but the usual suspects are Teak, Paulownia and Eucalyptus as they are all fast growing trees.
The least common form of hardwood investment is direct investment in a timber supplier, which requires millions of pounds and advanced knowledge of the timber industry. The most typical timber investment is through a 401k (U.S.) or pension fund.
According to experts Tree growth averages about 8 per cent a year. "If the market goes up that is an added bonus [to the tree growth]. This is what makes hardwood a safe investment," says Liane Luke, head of timber investment at Four Winds, which manages specialist fund Phaunos Timber.
Bloomberg Wealth Management says Hardwood has quietly and consistently outperformed nearly all other commodities for the past 100 years.
Another attraction of hardwood investing is that when hardwood prices fall, there is still a "steady offset of the physical growth of the tree", says Eva Greger, who runs GMO Renewable Resources, the large Boston-based fund manager that has been putting money into forestry since the 1990s.
The new projects are currently entering the market and investors can buy directly in forest plantations with a company. Interest in this type of hardwood investment is growing and is a great addition of an investment portfolio.
by: WilliamDennis
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