Forestry Investment – Structured Investment Vehicles
Since forestry investment possibilities have been around for decades, more and more investors are putting their money into this market. These investments bring more returns and pose fewer risks to the investors, unlike other unstable investments.In the last fourteen years, stock investors have encountered many challenges whereby they have not been able to balance investments in this asset class, and they have registered massive losses for four years now. But for forestry investors, they have been able to register remarkable progress and turnover annually. If you are looking to invest in this industry, you need to factor in some important aspects so that your forestry investment flourishes.For this reason, this article will highlight some of these investment vehicles that make forestry investment option available to the investors.
Besides looking for a piece of forestry land, an investor must look for a company that he or she will commission so that it can grow, harvest and sell the types of trees that they will grow on his or her behalf.While this might look like a walk in the park, this investment technique requires many questions answered. Some of these questions include where to find the land to invest in, the type of trees to plant that will be profitable, and which company can offer forestry management services once they acquire the land.
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.Pre-negotiations of timber prices before you even begin harvesting is good since it helps you resolve any issues with regards to fluctuations in future prices.
In conclusion, one other risk that you should prepare to face if you decide on doing forestry investment is the risk of natural calamities such as fire. 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.