Factors to Consider When Investing in Forestry
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.In contract to this, forestry investment has shown tremendous growth and profit for a long time now. Investors who want to venture into this line of business need to understand that there are standard investments methods they need to incorporate for them to flourish. As a result, below are some standard investment methods that investors need to put into consideration in their forestry investment.
First, an investor should buy the lease to a piece of forestry land, and then look for a company that will grow, harvest and sell the type of trees the investor wants to plant. 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.
Obviously, other questions will come up like how much money the need for the piece of land, who will buy the wood once it is harvested, how much the wood will be sold at, and what challenges are involved 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.In some instances, these companies will enter into an agreement with you to plant trees on their behalf and at an agreeable price. There are a number of factors as an investor you need to consider before settling on a specific price with the timber buying company, these factors include, the geographical location of your farm, the variety of trees you want to plant and the quality of timber you expect from the trees. 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.
To conclude, you should prepare yourself to expect disasters such as fire outbreaks in case you are thinking of doing investing in forestry.However, this often occurs rarely and if you have taken an insurance cover, then be rest assured that you will be compensated if this happens.