Hatchet Creek Land

Timber as an Investment

Do you shake your head in despair at wildly fluctuating stock prices, poor bond yields, and historically low interest rates on cash investments? Well then, consider investing in timber. Trees don't stop growing when there are oil shortages, terrorist attacks, or a bad days on Wall Street. Investing in timber can be an excellent strategy for portfolio diversification. According to the Alabama Forestry Commission, investing in timber typically yields an 8% to 16% return. Did you know that many wealthy investors and institutions, including universities, pension funds, and foundations, are invested in timberland to balance portfolio risks?

Not only do trees grow, year after year, but the value of pulpwood, chip and saw, and saw timber increase over time. The longer trees grow, the more valuable they become. And not only do the trees grow in value, the land increases in value as well. Sounds good doesn't it--trees growing, timber prices increasing, land value increasing!

You can time the sale of your timber to meet your own financial objectives. Unlike tomatoes, trees do not have to be harvested within a narrow time window. There are several options for balancing revenue generation and recreational enjoyment. For example, you can decide not to clear cut, but thin instead, to leave park-like stands of trees for enjoyment and recreation. You can decide to take advantage of grant money to plant long-leaf pine and then harvest the pine straw for income. Your forest management decisions are up to you, your timeframe, and your financial and personal goals.