In turbulent political and economic times, many investors are attracted to physical, tangible assets that promise some sort of protection against inflation, upheaval in the financial system, or political change (or often, all three at once). Gold is one such “real asset”; property is another. But while most of us probably have some exposure to property, and many readers will already own gold, there’s one “real” asset you perhaps haven’t considered forestry. Investing in woodland might sound like a hassle (it can be), or only for those who are aiming to pass their wealth to the next generation (it certainly has its uses on that front). But if you are looking to diversify your portfolio and plan to invest for the long run, it’s an asset class that you shouldn’t ignore.
Woodland covers around 13% of the UK, according to government statistics the best part of 3.2 million hectares. It’s also attracting growing interest from institutional investors. These include the Church Commissioners, which manages the Church of England’s investments, and has on its behalf built a portfolio of forestry worth around £250m. Forestry can provide both long-term income and capital growth. The income is generated by the sale of the timber felled each year the biggest customers come from the construction industry, but the paper and packaging business is a significant source of demand too. Growth, meanwhile, is driven by the rising capital value of the asset over time as timber prices rise, so do the value of the forests producing it. Continue reading “Save on tax and save the planet: put some money in forestry”