subject: Pros And Cons Of Forestry Investments [print this page] The Pros and Cons of Investing in Lumber The Pros and Cons of Investing in Lumber
Have you ever passed a truck full of logs on the highway and wondered what they were going to do with all those trees? Its an odd sight and can be scary if you are driving behind one of those trucks. What you don't know is the truck is carrying one of the most stable investment products in the world.
Lumber is a precious commodity and yields huge returns even in a down economy. Hardwood trees are in demand because energy companies need them for utility poles. The part of the tree that cannot be used for poles is reduced to wood chips and used for fuel. There will always be a need for electricity and power lines all over the world and as more countries develop their power infrastructure the demand for quality hardwood lumber will remain.
As an investor you may not have considered adding lumber to your portfolio or it may be just a small part. Now may be the time to consider making this product a larger part. Investing in lumber has its pros and cons. There are many factors to consider before making the decision to invest.
Pros
With lumber you get a good return on your investment. There is currently a 10-14% return per year particularly for the Robinia hardwood lumber. This same hardwood is in an excellent forestry location, Germany, which is easily accessible to the rest of the world. Germany is also a stable country. You have the potential to be the owner of not only the trees but the land as well.
Cons
As with any investment, there are risks. With lumber in particular there is the risk of the trees being destroyed by storms or fire and possibly disease. The good thing is there is excellent insurance available to offset any disaster so you are not left without recourse. Another consideration is the length of time required for trees to mature before they can be harvested. It typically takes 10 years at a minimum and 25 years maximum. This risk is offset by the huge return at the end of the cycle.
Investing in lumber is a good choice if you are looking for a stable long term investment. The yield is not affected by the economy and the returns are quite generous. To learn more about investing in hardwood lumber visit http://robinia-invest.com.
by: Gary Green
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