Why Invest In Timberland?
The quick and fast answer to this question is timberland investing is a tangible investment that you and your family can continue to enjoy as it increases in value.
Secondly, many investors prefer it to traditional real estate investing when business owners have to contend with the 3Ts - tenants, toilets, and time. Even with a great property management company, this can be a bit time consuming, and compound this with COVID-19 rental moratoriums, and the matter can be really involved.
Thirdly, and perhaps most importantly, timberland investing hedges many portfolios against inflation. Historically, timberland returns have mitigated risk and shielded profits during times of economic volatility.
By the way, you can research timberland investment performance by the NCREIF Timberland Index. This index is published by the National Council of Real Estate Investment Fiduciaries.
Timberland investing is an excellent addition to any investment portfolio for another reason. We are not financial planners, but based on experience we recommend this strategy.
Timberland returns historically move in the opposite direction of most other asset classes, which means it provides diversification of the overall investment strategy , which lowers portfolio volatility and risk.
Making Money In Timberland Investing.
There are a plethora of ways to make money in timberland investing, but they all essentially are distilled into 3 areas. First, off a great deal of money can be made by selling and harvesting timber. This is a seasonal venture so, time it wisely. Secondly, there is the biological return, the increased value of the trees you haven't harvested as they grow each year. Thirdly, there is the land appreciation process.. While land appreciation is relatively slow, if the timber is in an area projected for growth.
How To Invest in Timberland
You can approach this investment creatively. Whether you are leveraging a trust, non-profit, corporation, or REIT for example, investing in timberland is a solid investment. Generally, the best way to enter this investment class is to do so retaining higher amounts of capital and equity, maintaining better liquidity. You accomplish this by purchasing shares in pubicly traded stocks held in REITS (Real Estate Investment Trusts) or EFTs (Exchanged Traded Funds) Of course, another alternative is to directly purchase timber lands for investment. This option t.ends to require time to appreciate, and though it is lucrative long-term, it is not liquid and must be approached with a well-devised investment strategy.
In this blog series, we hope each blog submission is providing you with the information necessary to make sound business decisions about your portfolio. We want to reiterate: YOU CAN INVEST LIKE A MOGUL® AND MAKE A TON OF MONEY EVEN IN THIS VOLATILE CLIMATE. Schedule an appointment to discuss your possible strategy You just need to understand, timing, planning, and intention within your strategy.
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