Sunday, January 23, 2011

Investing in timber. Does money grow on trees?

Does money really grow on trees?
Investing in timber. It sounds the ideal investment. Buy a piece of woodland or forestry plantation feel good about preserving the environment and enjoy a financial return as you harvest some of the timber you have planted in your forestry.

Even with ongoing international pressure against deforestation and illegal logging, globally tropical forests are being destroyed at a rate of around 13 million ha per year. This is roughly four times the size of Belgium and this destruction is responsible for 20% of global greenhouse gas emissions this is more than all the world’s planes, trains and automobiles combined. Despite this only a measly 1% of tropical forests are certified by third parties as being sustainably managed.

Tropical Timber Investments Tropical Timber investments such as in Brazil have recently made more accessible and a variety of providers offer direct investment solution in tropical tree plantations to individual investors, which can be an interesting alternative to common stock market investments. Tropical Timber investments normally base on sustainable forestry management practices, use certifications from the Forest Stewardship Council (FSC) and plant woods such as Eucalyptus, Teak and Mahagony and other species which have a high commercial value and aid the reforestation efforts in countries such as Panama or Brazil. Such investments show normally an expected yearly return of around 10% - 15% over a 20 - 25 year horizon, dependent on forecasted assumptions and the plantation management

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