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Investing In Timber Is Win-Win For The Planet

August 25, 2009Article by Ray Withers

The idle entrepreneur’s dream is to get rich doing nothing and that’s just what some businesses are trying to do by investing in timber.

The concept is easy –

* Buy some agar wood, teak or similar hardwood trees
* Find a plantation where the local community are keen to manage and harvest your investments
* Sit back – and watch you investments grow

Then sell, trade or offer an option in your efficient carbon offsetting investment to corporations who want to show the world that they are taking their green credential seriously.The idea behind this grand scheme is that the easiest and cheapest way to stop pollution and other climate control problems is not investing billions in low-emission technologies, but by simply spending a fraction of that money on reforesting the millions of acres of tropical hardwood that have disappeared due to illegal lumbering.

The trees soak up carbon dioxide from the atmosphere and breathe out life-giving oxygen.So, an individual or company can calculate the amount of greenhouse gases they generate in a year and invest in an equal number of trees that convert those planet-harming poisons in to fresh air.

For investors, this kind of deal has a double bonus – not only do they do they get to tell everyone how caring and sharing they are by investing in trees, but the y reap massive tax advantages by wrapping that investment in a low-cost, tax-effective pension vehicle as well.Watching your money grow by investing in forests is a relatively cheap, high-yield commodity play.

A minimum input of £10,000 – £12,000 over the medium to long term buys a stand of 300 agar wood or teak tress on a plantation in Sri Lanka or Malaysia, according to international consultants Property Frontiers, based in Oxford.Agar trees mature quicker than teak trees, so are ready for harvest earlier, but the cash return is lower.The estimated return on investment for a stand of 300 teak trees left to grow for 15 years is about £250,000.

Another sideways benefit is providing much-needed income for families in Asian communities by employing them to manage investments.Everyone seems to run out a winner from investing in hardwood. The lumber generated is sustainable – at the end of an investment term, the stand is simply replanted.

The investor wins, providing the market for hardwood remains high, and this is quite likely as the G20 is backing a call to outlaw illegal lumber in favour of sustainable plantations.Families and communities are financially enabled to develop where they currently have no incomeThe returns on investment are significant.Of course, like any investment, sustainable forest management comes with a downside. Forest fires, plant disease and bad weather like hurricanes can strike at any time.


Ray Withers

Ray has over 17 years’ experience in the international property market and bought his own first international property investment back in 2002. Aside from running Property Frontiers, Ray has been involved in residential, hotel, student and commercial property investment and development in both the UK and overseas and co-wrote "Where to Buy Property Abroad - An Investor's Guide". As Founder and Trustee of the Frontiers Foundation, Ray is directly involved with many of its projects to ensure they have a direct and tangible impact in individual communities across the globe. He is passionate about property, travelling, scouting out new opportunities and finding time to spend with his young family.
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