Investment Articles

The Carbon Tax introduction in Australia on the 1st July doesn’t just mark a change for big businesses and the top 500 emitters; it also marks an opportunity for smart investors to get involved in the fastest growing market in the world.

The Carbon Market is set to grow faster than any commodity ever seen before. The introduction of the Carbon Tax means that the top 500 emitters now have to offset their carbon emissions by purchasing carbon credits, one metric tonne of ‘clean air’ for every metric tonne of pollution they create. As you can imagine the amount of carbon emitted by 500 companies named as the ‘top 500 polluters in Australia’ is vast indeed. Many people also believe that it is only the top 500 emitters that will be hit. This is not the case. In a recent court case a NSW mine wishing to expand its operations was told that this would only be granted should they offset their 575 Mil tonnes of carbon pollution over the next 20 years. This is not a one off either; this is set to become the norm. And as you can imagine that with 332 working mines in Australia, continuously growing, expanding and thus emitting, carbon credits are going to be THE in demand commodity with big business having no choice but to purchase them, and a lot of them.

This therefore puts those that can own or produce carbon credits in a very lucrative position. With a set price of $23 per credit, and one plot creating a projected 770 credits over 15 years with a low entry price; supply is incredibly low whilst demand is incredibly high. With the fixed price until 2015 the top emitters and other companies subjected to the carbon tax will not go offshore to purchase these credits, making the Australian market extremely lucrative. The gulf between the price of carbon credits in Australia and in the rest of the world is growing every day. Whilst Australia is seeing a set price of $23 per tonne, the European market for example is sitting at $7.85, making Australia’s individual carbon market the most profitable in the world. This is creating the carbon rush.

With a market that is so fast moving this carbon rush will not last long. Joining the carbon rush is something which all smart investors are looking to achieve. With profits of between 30% and 300% this is a market which is set to be the biggest in the world. Those in the know with the ability to get in on the scheme early are going to be very happy clients.

Capital Alternatives are market leaders in Alternative Investments and have a low entry level and low risk project which gains investors access to the carbon market whilst guaranteeing returns that surpass those in the traditional investment market. Due to limited supply and high demand opportunities within this market will not be around for long so it is something to act quickly on before it’s too late.

For a free report on an ethical, safe and highly lucrative carbon market which is available for a limited time visit http://www.capitalalternatives.co/au/lau

Alternative Investing has become a trend in recent years. The traditional market cannot compete with the returns available, which is why investors turn to alternative projects to make their money work harder for them.

A quick look at the investments available on the traditional market shows that the only way in which investors are making returns is to enter into high risk projects over a long period of time. The returns being seen are also reasonably meagre. With the rising cost of living and inflation, people cannot afford to lose money on investments. Now more than ever people need their money working harder for them, generating income and creating high returns. The stock market is underperforming and the traditional market faces issues of volatility and cannot deliver rates that are so needed.

Over ten years the S&P 500 is up just over 10 %, or about 1 % a year. On a five year basis it’s down about 18 %. Similarly the Australian Super this year has made a loss of 2%, and investors are told that they should be thankful that this was the only loss made.

The instability of the traditional market has smart investors turning away. Turning to other projects to diversify their portfolio and have their money working harder for them. A direction in which many smart investors are turning is towards the alternative investment market.

Due to the fact that alternative investments have low market correlation, they are safely distanced from the traditional investments and have therefore been far outperforming anything available on the investment market.

The most commonly approached Alternative Investment is that of property. However the Australian property market has taken a downturn lately. House prices are dropping and we are not seeing the stability that we have become accustomed to over previous years. Meanwhile other Alternative Investments are creating returns that are unsurpassed.

The Carbon Market for example is set to become the fastest growing market in the world. As a tradable commodity Carbon Credits are going to be the most sought after tangible asset. The introduction of the Carbon Tax in Australia on the 1st July 2012 has created an opportunity for Carbon Credits to be created and then traded on the open market; creating massive profits for those who own them. Capital Carbon Credits is an alternative project which creates these Carbon Credits. With the ‘Top 500′ emitters being forced to purchase Carbon Credits, this is a commodity market which is in high demand yet very low supply.

Another great example of an alternative commodity which is in high demand but in low supply is actually the commodity of food. 3.6 billion people in the world rely on rice as a staple of their diet, creating a yearly demand of 437 million tonnes of rice. Currently the world can only create 381 million tonnes a year, leaving a vast shortfall. Agri Capital is a project which is creating the biggest commercial harvest in West Africa, a harvest which will create 9000 tonnes of rice per year. Winning ‘Best Alternative Product of the Year 2011′ and with projected returns of 15 % per harvest with the last harvest creating 16.2%; this is an alternative investment which is outperforming anything on the traditional market.

A further reason that people are turning to Alternative Investments is due to the ethical side of the investments available. In recent years a lot of the big profits being made have been through mining and oil companies. Companies which pollute our atmosphere; destroying our environment.

The Capital Carbon Credits is creating clean air for Australia. Growing trees in the Gippsland of Victoria the project is taking pollutions out of the atmosphere and offsetting the damage that the ‘Top 500′ emitters are creating.

The Agri Capital Investment has an enormous social impact on the area in which it operates. Whilst generating rice, it also creates jobs, healthcare, education and local markets for the community in which it is based. Also Agri Capital set aside 60 metric tonnes of rice per year to be given back to the community at no charge. Feeding the poor and improving the lives of those in the community surrounding the project.

These investment opportunities are not only greatly surpassing any of the returns that people are managing to get on the traditional market but they are also low risk. With guaranteed exit plans and insurance in place for varying projects; Alternative Investments deliver high returns in an ethical project whilst safeguarding your initial investment.

For a free report on an ethical, safe and highly lucrative rice market which is available for a limited time visit http://www.capitalalternatives.co/australia/

The investment market can be complex to navigate, especially for the novice, and knowing the characteristics and details of any product that you are considering investing in is an important step in building a successful investment portfolio. Structured bonds, which come in a wide variety of guises, can be particularly complicated.

What is a structured Bond?

Sometimes know as structured products, or structured deposits, they can be offered with the potential to generate a regular income or capital growth.

Such bonds are usually put together by the provider to suit the needs of a particular type of investor. This means that finding the right structured bond product for your needs will depend on your individual circumstances.

Different types of product will provide different levels of risk and return. Your investment will usually be linked to a particular index, such as the FTSE 100, depending on the structured bond product that you choose. This means that any return that you receive will depend in large part upon the performance of the index that your bond investment is linked to. The investment objectives of a structured bond product should be clearly stated and made available to the investor at the outset.

Structured bonds are usually taken out for a fixed period of time, this period can vary according to the product that you choose, from a matter of months, usually up to six years. Like other fixed term investment products you may be charged exit penalties if you wish to withdraw you money before the fixed period is over. This means that you should carefully consider the length of commitment that you are able to make, or you could end up losing out.

A plan provider will usually have your investment underwritten by a counter-party such as an investment bank. before embarking on a structured bond investment you should be aware of any compensation that you would be eligible for should the firm that you are invested with, or the counter-party go bust.

Sometimes structured bonds will be sold as “kick out” products. This means that if the index to which your investment is linked reaches a certain level, the products may be “kicked out” early, usually on the following anniversary. However, if this does happen you will usually have already received a certain level of growth on your investment.

Some structured bond products will offer a degree of capital protection, but yield may fluctuate. Investing through a structured product can often be a safer option than investing directly in stocks and shares, but it is important to remember that any risks involved should be carefully considered and you could end up getting back less than you originally invested.

There are many different types of structured bonds available, and negotiating the terms and individual characteristics associated with each product can be difficult without the help of independent investment advice, particularly for the novice investor. Nevertheless, structured products can bring greater diversity to your portfolio, and with the right advice you may be able to find a product that is suited to both your attitude to risk and your desire to generate a desirable level of return for your capital.

John T Hughes writes for Savings Bonds, a site dedicated to helping you to find leading savings or investment bonds options that may be suited to your needs.

Purchasing an investment property is a big decision and one you have undoubtedly made with a view of benefiting from this purchase at a later date. Your decision to be a landlord for a rental property should not be a short term investment. There are costs associated with the purchase and sale of properties and to make it worthwhile, you will need to hold on to your investment long enough to cover the costs and make a healthy gain when you eventually sell.

The idea behind the purchase of an investment property is that the property will be rented out which helps with the ability to finance the investment and that during this time, the property will appreciate resulting in a profit when the time comes to sell.

Australia provides taxpayers with the opportunity to benefit from negative gearing aspects associated with investment properties which can assist in the decision to being a landlord in the rental market a worthwhile option and exciting venture.

To have a positive experience in owning investment property ensure that you seek expert advice from professionals who have your best interest in mind. This advice will ensure that you are aware of the various costs associated with rental properties, the best tax saving tips, the property which will offer a good return and the options for various loan structures.

There will be various tax considerations to be aware of such as what will be deductible and what will be treated as a capital expense and the various treatments of both. Depreciation matters and Capital Gains/Losses will also be of importance, therefore, it is imperative to place your taxation matters in the hands of a good tax accountant experienced in investment properties.

Without the good advice of these experts, your investment could be a costly exercise which take a considerable time to recover from.

Pat and Trish decide to purchase an investment property. The house they live in has a good amount of equity so they will be able to purchase an investment property and use the equity in their home as the deposit. They fall in love with an old home with lots of character in a suburb nearby. They decide to take out a loan of $367,500 for the purchase ($350,000) and fees ($17,500). The loan they applied for had the option to fix the interest rate for 5 years which they opted for as a safe guard against any rise in interest rates.

The property is rented almost immediately for $350 a week so they are off to a good start. Two months down the track they receive a call from the tenants complaining about leaks in the roof and gutters. After obtaining some quotes to repair the damaged roof and gutters they realise they do not have the $23000 required to pay for the repairs so they go back to the bank and obtain another loan to cover the costs. They had only just managed to be able to have the additional funds approved as their serviceability based on their income only just scraped in.

Three months go by and the tenants approach Pat and Trish again to advise them that the property is having major drainage problems. When the problem is inspected, it seems the roots of a tree has broken the sewerage pipes. The quote to repair the pipes was huge at $17,000 and Pat and Trish could not obtain anymore finance from the bank. They decide that the only choice they have is to sell the property.

The tenants move out. 4 months go by and Pat and Trish eventually sell the property. Due to the drainage issue it took longer to sell than normal and they ended up having to sell the property for $10,000 less than they they purchased. On top of that, they had to promise to fund the costs of repairing the sewerage pipes within 2 months. The costs associated with commissions to the real estate on the sale added another $10,200 to their loss.

When they approached the bank to advise of the sale and obtain the payout figure of their loan, they were reminded of the early repayment fees they will incur due to the loan being paid out while still in a fixed term period. Pat and Trish were shocked as they had no idea that this would come to the amount of $24,000. The repayment fees were stipulated in the contract, and the mortgage broker providing the loan advice did make mention of fees in connection to early repayment but Pat and Trish did not realise how high the fees would be. They had also heard that exit fees had been abolished and presumed that cancelled out any fees associated with the early repayment of the loan. They soon found out that early repayment fees were not classed as exit fees.

Pat and Trish had no choice but to suffer the loss associated with the investment property. The costs incurred with the purchase and sale, the holding costs of insurance, rates and interest, the repairs and the early repayment fees, Pat and Trish made a loss of over $100,000 in less than one year and were still left with a part of the investment loan to repay. The loss was more than what Pat and Trish made from their employment in a year and it would take them a long time to recover from this.

Thankfully, Pat and Trish were able to make some tax savings due to the negative gearing impact in their tax return. Because their costs outweighed their rental income by a substantial amount, they were able to offset it against their employment income and save thousand of dollars in tax. Although in this case the negative gearing eased the impact of the losses, the amount of money which Pat and Trish spent which resulted in the tax savings are far from a positive outcome.

The early repayment fees and the cost of repairing the drainage, were not deductible as an expense in their tax return, however, they formed part of the cost base when calculating the capital loss of the investment property on the sale. They will not be able to offset that loss until such time as they make a gain on another investment property should they choose to invest again. They are also still repaying part of the loan for a property they no longer hold.

Purchasing an investment property is a positive way to create wealth and can be done very successfully with the right advice. Many investors have made their fortune buying rental properties which in many cases even earn them a healthy income. It is an excellent means of saving as it provides an avenue for those with extra funds a way to make the money work for them. There are many success stories and it is not unusual for someone who has purchased an investment property to sell the property 7 years later and make a gain of $400,000. Not a bad earning when you consider the amount of years you would need to work to generate that amount of wealth.

Investment properties are still considered to be a positive option in Australia. Currently there are opportunities available for investors to purchase properties with a $10,000+ rebate from the Government annually for 10 years which results in it being cash flow positive. This means the purchaser can buy rentals which may end up not costing them anything at all. In fact, at the end of the year after all costs are realised, there can be a nice profit to be celebrated.

Good opportunities are available, however, expert advice from a professional is the first and best investment to make in ensuring wealth creation is a lucrative event.

Marian Trinick is a Public Accountant, Tax Agent and Mortgage Broker. Marian owns a business in Coogee Western Australia offering a multitude of services to individuals, sole traders, partnerships, trusts, companies and investors. Her Mortgage Broking experience extends to personal, motor vehicles, properties, leases, equipment finance, smsf and business. Marian has a wealth of experience and expertise in the property investment market and can provide the advice on the optimum tax savings and the best loan to suit your situation. Find out where Marian is: http://www.cockburnfinancialservices.com Call Marian now to find out how you may be able to invest in property and be cashflow positive at year end resulting in you not paying a cent for the investment. Also, ask Marian how you can borrow the funds to invest using the equity in your current property as the deposit. Refinance now and see how much you could save! 08 9434 2371 or 0412 266 597. ACL: 395605

The state of current investments available on the traditional market is not very stimulating for those wanting to make a decent return whilst not having to take a massive risk. Now more than ever, with the rising cost of living we need our money working harder. More and more investors are turning to alternative projects to create the returns that the traditional market can simply no longer make. The Carbon Market is the fastest growing market in the world. Set to outperform anything in the traditional investment market, a carbon credit investment is the most lucrative investment available on the retail market.

The introduction of the Carbon Tax on 1st July 2012 has affected far more than the big emitters it is established to tax. Carbon Credits are a tangible asset. There are therefore many profitable, safe and ethical investments to aid people on getting involved in the ‘Carbon Rush’.

In descriptive terms; a carbon credit is representative of one metric tonne of greenhouse gas emissions removed from the atmosphere; thus offsetting carbon emissions. Growing trees in the Gippsland area of Victoria, Capital Alternatives and their Project Developers are generating carbon credits from fully accredited bio-diverse woodland. These Carbon Credits are classed as ‘personal property’ in law meaning their value is protected. Those smart investors who have the foresight to acquire them can sell them on to the big emitters for returns which dwarf more ‘traditional investments’ in the current financial climate.

Although the Carbon Credit market is global, Australian investors have a unique and rare opportunity which is cause for celebration because there is no escape for big emitters. Qantas has recently announced an increase in prices in an effort to combat the cost in offsetting their emissions. These credits can’t be made out of thin air and need to created, and this is where the opportunity lies.

There is no escaping the fact that carbon credits are going to make those in the know very happy and very wealthy, the demand is enormous whilst the supply is limited. Capital Alternatives have rare opportunities for retail investors to become involved in the Australian Carbon Credits market by creating these highly sought-after credits while the price is still fixed at $23 until 1st July 2015 when the price floats.

With such high returns and guaranteed exits, this prospect will be quickly taken up by those wanting to take advantage of this unique and very lucrative market.

About this Author
For a free report on an ethical, safe and highly lucrative carbon market which is available for a limited time visit http://www.capitalalternatives.co/au/lau.

In the current investing climate many investors are seeking out alternatives to traditional investment assets in an effort to boost poor returns and bolster the limp performance of their pension portfolios. While stocks and shares continue to display the kind of up-and-down volatility that would make a rollercoaster jealous, real-assets including fine wine, stamps, land and forestry have all continued to grow in values as rising global incomes combine with a growing global population to boost demand against a backdrop of limited supply.

Whenever supplies of an asset are limited and demand increases, we see the value increase as buyers compete for the best assets, so those investors in control of finite resources are likely to continue to capture capital growth regardless of the performance of the wider economy.

Whilst in is certainly true that some alternative investment assets rely on the existence of wealth for their end-use market; for example stamps and fine wine rely on the existence of wealthy buyers, it is also true that certain essential assets will enjoy a demand even if the global economy were to collapse tomorrow. These safe haven alternative investments include agricultural land, energy-generating assets, infrastructure and commodity driven properties such as forestry investments.

There is a limited global stock of land suitable for agricultural production and demand for food commodities and feedstock for animal feed and biofuels in growing exponentially as developing nations expend their populace and rising incomes lead to greater consumption of commodities. Indeed the giant populations of India and China are entering their most resource-intensive phase of growth, just like the west during the industrial revolution. The difference here is that the populations and resource requirements of these countries is much larger. This makes agricultural land a precious resource that is likely to become one of the most valuable assets on earth. Not only that, but goof quality farmland produces annual income from the production and sale of food commodities, so income streams also rise as food prices increase. It is worth noting that the amount of arable land per person on the plant has halved since only the 1960’s, going some way to explaining why so many institutional investors are holding more and more agriculture investments.

Renewable energy investments that produce income from solar, wind or agricultural crops are also seen as a potentially great alternative investment opportunity as they continue to generate revenue regardless of dividend performance in traditional investment markets. As long as the wind keeps blowing and the sun keeps shining, those in control of renewable energy investment assets will continue to earn up to 20 per cent per annul income yields based on current project establishment costs.

For the long-term investor, forestry investments continue to grow in any economic weather, because the majority of financial returns is actually driven by the biological growth of trees, not the performance of the economy. Whilst a relatively buoyant economy is essential in order for there to be demand for timber products, it is growth in emerging market economies what will drive future demand, and so investors who own a stake in a commercial forestry investment property close to emerging markets are likely to capture non-correlated growth and be able to create substantial revenues from the sale of essential commodities as trees turn into valuable timber stands.

In summary, alternative investments are popular because they generate returns not dependent on traditional markets, but investors should always be careful as these kinds of real-asset alternative investment all carry asset, location, sector and counterparty specific risks that many investor may not recognise or be able to screen for, so the use of an experienced consultant with a good track record of identifying successful alternative investment assets is essential in order to avoid undue risk and maximise upside potential.

David Garner is Partner at DGC Asset Management, an alternative investments boutique specialising in property transactions in the agriculture and renewable energy sectors.

People are worried, concerned and yes, even scared. How do you invest in these volatile and uncertain times? The memories of the Global Financial Crisis (GFC) of 2008-2009 are still fresh. They themselves may have “lost” money during this period as have many of their friends. They know people or have heard stories of people who “went into cash” at the right time.

The global economies and investment markets are again facing new uncertainly and volatility. People are asking themselves and their advisers questions such as:

• Will I lose my money?

• Is any place safe?

• Should I go into cash?

• Am I wasting my money by salary sacrificing into superannuation?

Let’s look at the recent past and where we are now.

In the beginning

The Australian share market peaked at around 6800 in November 2007. Concerns over the American subprime market and the creditworthiness of the debt products arising from these mortgages, Collateralised Debt Obligations (CDO’s), began to appear however the crisis did not reach a climax until September 2008 when the Americans permitted the large investment bank Lehman Brothers to fail. Up to that point the debt crisis and resulting failures of financial institutions in American were contained.

Once Lehman Brothers failed, there was a massive global loss of confidence and lending between even large financial institutions froze as there was a fear that they could not repay their borrowings. Investment uncertainty and volatility increased. Interest rates in Australia and overseas fell rapidly, governments propped up financial institutions, and there were massive government stimulus packages as well as government guarantees over depositor’s funds. The Australian share market hit a low of around 3100 in April 2009.

Some Hope

Gradually the measures in Australia and overseas took effect. Confidence rebounded to some degree and the Australia share market was soon back to 5000. The Reserve Bank began to raise interest rates from the low of 3% to 4.75% by November 2010. Talk was of how soon the federal budget would be back in surplus and how to contain the inflationary effects of the resource boom. Investment uncertainty and volatility decreased and money came back into the market.

The picture overseas was mixed. The BRIC countries of Brazil, Russia, India and China continued to grow at a fast pace as did other emerging and secondary economies such as Vietnam, South Korea, Malaysia, Turkey and Argentina to name a few. Commodity prices rose which has helped Australia as well as the oil rich countries.

Too soon to celebrate

Against this good news the effects of the GFC have had a lasting impact on other countries which have struggled with debt and economies which have not fully lifted out of recession. In Europe the debt crisis spread from Ireland to Greece and then to Portugal and more recently doubts over whether Spain and Italy can manage their debt. Countries such as Germany, which have bounced back strongly from the GFC, are reluctant to fund the mismanagement of the PIIGS (Portugal, Ireland, Italy, Greece and Spain).

The big concern however is the effect that a default of even a country such as Greece would have on the countries of the Euro. As 2011 progressed and into 2012, this concern has had a major impact on the share markets.

The other focus of bad news is the debt problems of America and its continuing lack of growth. America has taken on huge debt funding wars in Iraq and Afghanistan, the bailout of financial institutions, a loss of revenue because of tax cuts to the rich and unfunded social security entitlement programs authorised by the Bush administration.

Market panic occurred in July and August 2011 when the debt problems in Europe became more serious and the political brinkmanship in America over lifting the federal government’s debt ceiling brought about a lack of confidence which was brought to a climax when Standard and Poor lowered their rating of American debt. The Australian market had one of its largest falls on 9th August, although it rebounded the same day. Once again investment uncertainty and volatility increased.

Going Forward

Major concerns on people’s minds are as follows:

1. We have a situation where Greece will almost certainly default on its debt, which could spread to other European countries.

2. Economic growth is poor in much of Europe and America however the means to stimulate growth through deficit financing and the lowering of interest rates is not available.

3. America has unique and persistent problems such as falling house prices, a reluctant to raise taxes and the ongoing drain of overseas military commitments.

4. There is friction between China and its trading partners, especially America, over the value of the yuan and persistent trade imbalances.

5. There are special concerns over China such as its continued desire to hold low yielding American debt and the sustainability of its economic model which has been reliant on exports and investments.

These concerns are summarised in a fear that we are on the verge of a second GFC. Hence the questions presented at the start of this article.

This is a reprinted summary from an article in http://www.barrylizmore.com.au

Barry Lizmore is a financial planner in Melbourne Australia and is a lecturer in financial planning at Deakin University. I have recently written a book, “Take Control of Your Money” which explains the financial planning process and answers questions such as:

My educational web site which includes information on my book is http://www.barrylizmore.com.au

Fine wine investment market has changed dramatically in the last twenty years and is booming, even more so since Hong Kong removed a duty they had on wine, and demand has risen dramatically.

Investors look to alternatives ways to invest their money in trying times and with Asia’s rapid wealth, which looks only to increase, more and more money will be invested in fine wine. Investing in wine is thriving amongst the Asian markets, especially with the increasing demand from China.

Wine is generally more stable than stock-market linked indices allowing investors to securely own a tangible asset. Wine has always held its value and the reason why Bordeaux is a worthy asset is simply down to the laws of supply and demand. Investors want high returns from wine and fine wines can be a good, low-risk long term investment and less likely to follow the same paths as equity markets. There is no doubt that over the last 25 years wine has been a sound investment. Even in a bad harvest with a low quota, wines still get consumed and demand still remains stable and even grows with prices increasing up to 20% a year. Some wine investments have already outperformed gold and crude oil investments.

Fine wine is the only asset that operates with a perfect supply curve. It is the uniqueness in demand in wines that create a consistent growth curve which is why wine has little in common to other asset classes in terms of volatility. Wine investment is tax free as it does not attract Capital Gains Tax. VAT and Duty may also be avoided if your wine investment is kept in bonds.

Fine wine as an investment should be bought from a reputable source and storing the wine correctly is vital to ensuring its investment potential. There is a huge choice of fine wine investment companies to help people get into the market, and investors need not know anything about vintage wine.

Case prices vary but some top performers can command £5000 for each case and it is not uncommon for prices to be double that. Investors should benefit from a full market cycle between three and five years with maximum returns on an eight to ten year period. It has always been said that wine matures with age and so does the investment. As wines mature and become consumed, they becomes rarer which adds value to investments.

Wine investment is not a new trend, and is no longer the domain of the knowledgeable few as more and more investors are benefiting greatly and joining this exciting and vibrant market.

Written by Vin-X wine investment brokers, http://www.vin-x.co.uk.

In the current global climate, defined by low interest rates; high inflation; volatile investment markets; and poor short term visibility, investors are seeking out alternative investments that generate growth and income that does not depend on traditional market performance.

As such, much attention has been focussed on timber investments as a tool to preserve capital, hedge inflation and generate superior income in a low-risk environment.

Institutional Investors such as pension funds, university endowments and hedge funds have long known the benefits of investing in timber assets, with many such as the Yale University Endowment Fund holding 28 per cent of their investment portfolio in real-asset alternative investments including tropical forestry investments and farmland.

Timber investments are seen as generating non-correlative investment returns due to the fact that the majority of revenues is sourced from the biological growth of the tree, with only a small percentage of return attributed to timber price growth or land value appreciation. One credible university study found that over 60 per cent of returns from forestry investments can be attributed to the ‘biological hedge’.

Demand for timber products remains strong, and rises roughly in line with population expansion, a factor compounded by economic expansion in developing nations leading to a n increase in consumption of timber products per capita as new homes and other infrastructure in developed.

Currently, around 30 per cent of global timber supplies are sourced from illegal logging, and a further 40 per cent form unsustainable sources. The future demand dynamics then indicates that timber investments are likely to continue to outperform other assets such as equities, as they have for the past 30 years.

Taking a very broad view, forestry investment returns can be enhanced and potential downside risk substantially reduced through the application of strategic species and location selection, combined with experienced forestry management to create a sustainable and profitable investment model.

Broadly speaking, the faster a tree grows into commercially viable timber, the greater the return on investment, so selecting fast-growing tropical timber species is the first step in consolidating profitable forestry investments. Bamboo is one example of a timber species with great potential as a subject of sustainable forestry investments due to the fact that the rate of biological growth is so rapid as to ensure a commercially viable, harvestable timber stand within 4 years of planting.

Other features to take into account to maximise forestry investment returns are sustainable plantations managements, suitable site selection and investing in upstream products developments, allowing timber growers to process their raw materials and sell value-added timber products such as boards and other processed wood products.

Investors interesting in harnessing the characteristics of forestry investments for their own portfolio should be encouraged to seek advice from an independent third party with experience in identifying and delivering successful forestry investment projects.

DGC Asset Management provide independent advice for Investors interested in direct forestry investments.

TEAK – the truly ‘Hard Asset’

Plantation Asset Management Limited now offers one of the best opportunities for private investors to add long-term value accreditation to their portfolios by owning their own teak plantation on specially selected land in Brazil. Projected returns – based on historic price data and industry production averages – show that £10,000 invested now will produce a total return of £140,000 over 25 years. These returns reflect only 5% annual price inflation for teak wood, which has in fact seen average annual price rises of 5.2% over the past 30 years.

And all this comes with the major advantage that Capital Gains Tax and Inheritance Tax breaks exist for all forestry investments, so that you can lock away assets for your retirement, or your children and grandchildren without worrying about the long-term tax implications. The tax advantages will also boost overall returns even further. So, whether you are planning for retirement or long-term savings goals, such as university and college fees, planting teak now will ensure you meet your targets. In this offer from Plantation Asset Management you will also have the protection of full insurance of your trees against any fire or storm damage. This insurance is built into the capital cost of your investment, and comes with a warranty that ensures the nursery company responsible for initial planting will compensate you if more than 20% of the teak saplings die within the first year. Your land will be purchased on a 30-year lease, and individual investors will own their leased land and trees enabling investors to choose their own exit timing. Management of individual plantations will be at the choice of the investor, from a choice of three local forestry management companies – all well qualified, experienced and known to Plantation Asset Management.

Because of its strength, durability and weather-resistant properties, teak wood has been highly-prized and valued for centuries and remains a key component of modern construction and design. The wood is used in the making of floors, outdoor decking, outdoor furniture, solid doors and expensive decks for boats, as well as high-grade indoor furniture and fittings. Currently, there is strong demand for teak across China, Europe, India, Japan and the USA, and world consumption of industrial wood is expected to grow by 60% in the next five years, so that demand will overtake current potential supply in 2015 (source: United Nations). Thus, investment in teak wood now is a priority for forward-thinking investors.

Hard Wood = Hard Asset = Hard Cash

Teak is relatively fast growing, maturing in 10-15 years, and most furniture makers suggest teak wood aged between 12-15 years is ideal for their business – at this age teak has all the durability and weather resistance but is more easily workable than fully matured wood. Younger wood still has its uses, particularly at the cheaper end of the furniture spectrum and for fencing and light construction, whilst fully mature wood is the most valuable. Peak returns for teak are usually projected at 20-25 years, which is why Plantation Asset Management Limited has structured its offering on a 25-year plan, in which investors can exit after just 5, 10, 15 or 20 years. We will buy back your land and trees at cost + 5% per annum or you have the option to sell via our website trading platform or to a third party at any time. The offer comes with a low minimum investment of just £3,450 – including the plantation management fee. Investment is based on plots of 1/10th of a hectare (roughly a quarter of an acre), and investors can buy multiple plots subject to availability. Unlike many other forestry products there are no other further or on going costs/fees. This is a unique proposition. Management costs, including insurance, of the plantations are built into your investment, and you will receive regular information on the progress of planting and growth to be provided by the project managers. You are also free to visit your plantation and meet the farm managers and inspect your trees.

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