Extracted copy from The Times Guide
So what's good about buying Trees?
According to Grantham, forestry is the only low-risk, high-return asset there is: it has, he says, risen steadily in price for 200 years.
So what is hardwood investing all about?
Well, it's a commodity that you can own that has an inherent advantage over many others. As an example - if you were to buy a bar of gold that in 10 years had increased in value, you would have seen a return but you will still only own 1 bar of gold. With timber you can see not only an increase in value, an increase in the quantity - timber grows.
As the trees grow they need 'thinning', which is the process of harvesting some of the trees to allow the stronger ones to grow. This harvesting process normally happens every 4-5 years, but is dependent on growing conditions and company policies. Once the trees are harvested they are sold on the open market.
This is where the good news comes in. If you were to invest with a timber management company such as Oxigen Investments you will see a return in 5-6 years, however after that there is a thinning every 4 years and therefore a return to you every 4 years. You should expect to pay a one off lump sum for the trees, of approx £10,000 for 200 trees with no further up front costs, with a return in the region of £120,000 over 25 years.
We at Oxigen Investments have been working with plantations to tailor the investment with the British investor in mind and two of the main considerations have been:
- Protection - You should, at the very least make sure you get title to your trees, and a lease on the land upon which the trees are planted.
- Control - Ultimately, you want to be in control of your asset. The more control you have the greater the options are for exercising your rights.
Oxigen Investments are the first company who has packaged this investment in such a way so as to allow the private UK investor a slice of the pie that has up until now only been available to institutional investors and a select few with specialist knowledge and contacts.
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