What Do You Know About Nature
Forestry Investment – Standard Investment Methods
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. In contract to this, forestry investment has shown tremendous growth and profit for a long time now. For investors to thrive in this asset class there are several structured investment vehicles that they need to take advantage of. 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. 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.
To answer the question on which party may be interested in buying the timber harvested, you will learn that there is a vast number of production plants that buy the harvested wood for the sole purpose of manufacturing the wood into other products. Actually, some of these companies will contract you to plant trees for them and they will pay you a fixed price for every tree harvested from your farm.The price you intend to charge for the wood that you will sell should be determined by your farms location, kind of tree species that you want to plant and the quality of timber you expect the trees to give you. The benefit that you will derive from pre-negotiations of timber prices ahead of time is that you will be able to safeguard yourself against price fluctuations 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.However, this often occurs rarely and if you have taken an insurance cover, then be rest assured that you will be compensated if this happens.