Forestry Investment – Structured Investment Vehicles
With forestry investment options, investors have put their hard earned money into this industry. These investments bring more returns and pose fewer risks to the investors, unlike other unstable investments.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.For investors to thrive in this asset class there are several structured investment vehicles that they need to take advantage of. In this regard, this editorial will discuss some of the questions an investor considers before venturing into the forestry investment so that it can materialize.
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.Although this looks simple, this investment method leaves many questions unanswered. 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.
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. 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.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. 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. 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.