The article from Wyatt Investment Research says that one of the main reasons trees are a great long-term option is that healthy trees physically grow by around 4 per 6 per cent in value each year. The article concludes that timber is indeed "better than the stock market as a long-term investment."
Between 1991 and 2010, timberland investors saw returns averaging 11.16 per cent per year, with gold investors seeing gains of just 7 per cent each year during the same period. However, the article claims that people buy gold and timberland for very different reasons. "It's right that people buy gold primarily to protect the value of their investments and protect their cash from wider economic factors, such as inflation," explained FRA's analysis partner, Peter Collins.
"However, timberland can offer these benefits as well, as timber tends to emerge from recessions and other economic crises relatively unscathed."
One of the main benefits of investing in timber is the fact that the owner of the trees does not have to sell if conditions aren't quite right when the trees reach maturity. If timber prices are low, they can continue to grow in size and in value until the market is just right. As a result, investing in timberland can be one of a least risky strategies during tough economic times, added Mr Collins.
FRA is a research and analysis consultancy focusing on forestry investment. It supports a range of forestry investment schemes, such as those run by Greenwood Management in Brazil and Canada.
Forestry Research Associates
620 Vineyard Lane
Bainbridge Island, WA 98110
(206) 316 8394