Thursday, December 26, 2013

Guidelines to Make Profitable Investment in Trees

Trees are more than just financial assets and Need to be Conserved
Investors are always on the lookout for markets and assets that will help them make interesting and fairly profitable returns. With the global market undergoing continuous changes, the investment assets also keep upgrading. Investing in trees has become one of the most reliable and least risk-involving investment methods. This source of alternative investment still has unexplored areas and unknown incentives that need to be discovered for the highly beneficial returns.

Timber Prices:

Timber is traditionally considered an inflation hedge as it provides interesting returns even during the global recession or inflation status. According to researches and estimates, forestry investment can offer up to 20% returns as against 14.5% offered by equities (UK based survey). And on long term basis, a five-year term offers 17.7% returns as against 5.9% that equities have to offer.

However, timber is not an investment asset that is risk-free. Its price moves in a cyclical process and the ratio of demand /supply has undergone serious changes in the recent past. The bad news is that FSA does not regulate all the pooled investments, which is why you should be extra careful before making your investment decision. Avacade investments can help you make profitable forestry investment decisions.

Capitalizing on Global Depreciation:

The factors mentioned above will help you to justify your long term investment. The decreasing wood supply on a global basis is due to the fact that the land for growing trees is being utilized for other reasons without any replacement. Wood is also being consumed as biofuel with government pressurizing utility based companies to make use of biomass compulsory and popularize wood in schools and various public sector areas.

The returns that forestry investment offers are more or less predictable, and this feature makes it similar to bonds that offer both yield and capital gains. As an investor, you should look for rewards that are proper for your scale of requirement.

The Right Forest for Investment:

There are investors want immediate results and quick income. If you count among them, you should think of investing in mature forests instead of starting from the sapling stage of the trees. These mature trees can be harvested readily and offer you’re the fastest returns. However, a less mature tree will offer you with more benefits than a fully grown one but in stages instead of a single round.

You can think of purchasing a land piece directly for investing in trees or opt for pooled investment. While the former one is costly in approach, the latter does not allow investors to control the investment they make.

Making the Most of Tax Status:

The tax status associated with timber is its greatest attraction source. Commercial forest based investment will make you free from inheritance tax or IHT, two years post the ownership. However, an investment will qualify when the product gets marketed simultaneously. Although, forest has no qualification as investment, the timber which is sold, does not in any way, invite income tax or capital gains tax through the profitable sale of land. Furthermore, you may also be able to claim for grants for the maintenance of your forest.

Such areas are pretty complicated and require expert opinion before any serious decision-making. Your correct decisions will positively affect your financial future.

Author’s Bio: Alisa Martin is a proficient writer who is an expert on the subject of finance and investment. She regularly contributes articles on topics like using avacade investments for beneficial returns and other such alternative investment schemes. 

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