Why Tropical Trees Are Low Risk But High Return

The Economist magazine has stated that the average annual returns on timber, meaning managed preserves that are eventually harvested, have outstripped those from leading global stock indices, property, oil and gold for the past decade. Worldwide, timber has attracted more than $20 billion of investment from institutional investors.Supporters of this trend say that managed timber reserves are good for the environment, preserving biodiversity on lands that might otherwise be logged recklessly. Plantation owners agree with the Economist. There are more and more people on our planet wanting wood products for housing, furniture, paper and more, while there are less and less forests and woodlots available. The result is a simple economic fact: Demand will continue to exceed supply, causing high prices and therefore high returns for tropical tree investors.

Many people think that tropical trees are slow to grow. The first thing you need to do is get away from that kind of short term thinking, as it causes so much trouble for investors. For example, many people enter the stock market thinking that short term is one week and long term is two weeks. If you stop and think about it, what they are really doing from tree spacing calculator is throwing the dice in hopes of a magical quick return on investment. As any business owner will tell you, it takes years of careful management and strategy to build a profitable business with consistent returns. Guess what, many tropical trees grow, mature and can be harvested in just 10 years time! Unfortunately, way too many public companies and mutual funds try to short term please investors, leading to poor performance in IRA's, RRSP's and pensions, and yes, even to scams and scandals.