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. For the last fourteen years, stock investors have faced several risks which include balancing investments in this market and not been able to make sustainable profits.However, forestry investments have advanced and have been registering good profits year after year.If you are looking to invest in this industry, you need to factor in some important aspects so that your forestry investment flourishes.As a result, below are some standard investment methods that investors need to put into consideration in their forestry investment.
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.Even though this may sound simple, this investment strategy poses a lot of questions to investors.For example, they have to know where to look for the land, the tree types to grow and who will look after the property once it is purchased.
Obviously, other questions will come up like how much money the need for the piece of land, who will buy the wood once it is harvested, how much the wood will be sold at, and what challenges are involved in this investment.
The market for the wood you have planted should not worry you as there are so many companies that deal with manufacturing timber products which will be interested in buying your timber. 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. There are a number of factors as an investor you need to consider before settling on a specific price with the timber buying company, these factors include, the geographical location of your farm, the variety of trees you want to plant and the quality of timber you expect from the trees. 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.
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.