Since forestry investment possibilities have been around for decades, more and more investors are putting their money into this market. This is because the industry comes with fewer challenges and excellent performance as compared to other unpredictable markets. 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. 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.For this reason, this article will highlight some of these investment vehicles that make forestry investment option available to the investors.
Apart from buying a section of forestry land, an investor must also find a company that will plant, harvest and trade the kind of trees on their 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. 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.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.