How to Invest in a Tree Plantation

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Some investors today are not satisfied with the returns of traditional investments such as stocks and bonds and have begun seeking other opportunities. Commodities are an area that has gotten a lot of attention from investors, so much in fact that some pundits are claiming commodities will be the best investment of the 21st century. While that statement might be a little bold, there is no arguing that a a large number of basic commodities, ranging from gold and silver to oil to sugar, coffee and cocoa, have risen sharply in price since 2000. Some investors who focus on agricultural commodities have also branched out into less traditional areas, such as tropical hardwood tree plantations.

Research potential tree plantation investments. Many tree plantation investment opportunities for the individual investor are structured as partnerships, and the plantation is in another country. It is important to make sure you are dealing with reputable businesses and people. Unless you are certain of who you are dealing with, invest in business entities based in the U.S. or Europe, as your legal recourse can be sharply limited elsewhere.

Decide what type of tree plantation investment you are looking to make. If you are looking for a more conservative investment, consider buying the stock of public company involved in the tree business or a timber industry exchange traded fund (mutual fund). But if you are looking for a large return on your investment within a few years, search for a smaller company or a partnership with a group of investors.

Reduce your choices to two or three of the best possibilities and perform final due diligence. Carefully vet the business plan, check the references of your partners, confirm all the financial arrangements, and so forth. It is generally wise to have an attorney at least look over any documents before signing them, especially if you are investing a lot of money.

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