An investment in timber is a long-term, steady investment and an interesting option available at the moment. Investing in this type of commodity helps protect investors during these economically difficult times, while also providing investors with returns that many commodity sectors have been unable to match over the last forty years.
Teak is one of the highest yielding species of tree in the timber sector. Teak is a small but sought after niche within the timber industry. This small segmented niche is normally managed by small companies that are privately owned, in contrast to being offered by larger institutional operators. This is due to natural teak forests being protected in most producing countries.
There are many different ways that an investor can invest in this form of timber, with reputable companies. How you choose to invest your funds and the company that you decide to go with will have a major effect on the amount of returns you can expect from your timber investment. The best managers of Teak plantations will invest heavily in the quality, strength and the well-being of the teak trees.
While researching the returns and opportunities that exist with teak investments, you will quickly discover that companies utilise a lot of techniques to calculate the returns on these types of investments. Unfortunately, as with many forms of Timber, there are few Internationally used measurements for pricing Teak. In proceeding to calculate and predict the returns on your investment, it is imperative that you utilise the same standards on every investment opportunity that you’re involved in. What is required is Due Diligence.
There are a lot of ideas surrounding what the net worth of teak is going to be in the next twenty-five years. There are also a lot of prediction on the amounts of teak trees being available in the future, and the condition they will be in prior to harvesting.
The most obvious way to carry out an investment comparison is to consider the amount of assets that you are going to be receiving for the capital that you will invest. Instead of trying to determine what your cash will be worth in the future. In layman’s terms, you should determine how much of your invested cash is actually going towards the product offered by the company and their cost. Or in even simpler terms, how many trees are you buying and how much will it cost to look after them.
When determining the return that you can expect to receive on a Teak investment, it is vital that you understand the type of annual percentage price increase that the company is using for projections. Furthermore, you need to pay close attention to how the company is using their data. Some of the data that companies may decide to use are price per unit or growth rate information.
Teak is commonly used and sold as a commercial wood product. The price per unit of teak is usually fixed at source, but will reflect quality and the way that it is processed. Plantations that harvest the tree are normally well managed locations that have fairly comparable growth rates. Teak is a type of tree that has been cultivated on plantations for hundreds of years. This is driven by quality and demand, especially in Asia, as a highly usable and sought after hardwood.
The minimum rotation times for teak are twenty to twenty-five years. With the prices for teak and the growth rates for the tree being fairly comparable, the return on investment for the commodity is based largely on the cost of the purchase. Ultimately, returns will be driven by supply and demand but if applying this concept to teak investments, as a long-term investor you should receive a healthy return on investment (ROI).
Here at silvinvest we highlight Teak Investments that are looked after by highly experienced Forestry management teams, inclusive of the local community and extremely sympathetic to the local wildlife. The projected returns are superb so if you are considering a long-term, environmentally constructive investment please register to access the Sales Brochures held within our members area.