Sat July 25, 2009, 10:05 am

Timberland Investment - A Hedge Against Inflation

A timberland investment offers a great hedge against inflation as reported recently in a report by J P Morgan Investment Analytics & Consulting.


J. P. Morgan was quoted as saying “Timberland correlates highly with inflation and is therefore an effective investment for preserving capital. It has outperformed other commodities in both high and low inflationary environments.” They went on to recommend that asset managers consider purchasing timberland to boost returns and diversify their client’s portfolios. They reported “Combining timberland into a well diversified portfolio leads to a more efficient portfolio (higher return, lower risk).”It was also reported recently in a Forest Research Group report that “Timberland is often touted as an inflation hedge and our research supports this claim. Timberland is an asset that will preserve capital in the face of rising consumer prices”. Both of these reports explained that timberland has historically appreciated with inflation and is a better investment during inflationary times.

There has been increased activity recently by investment managers investing large sums of money into   timberland, who would normally be investing in other alternatives. One of the primary reasons is because of their fear of coming inflation. Economic analysts are predicting that the current spending spree our federal government is having will almost certainly create severe inflation in the future. These investors look to timberland as one of the safest investments, with the best opportunity for returns that they can make at this time. We think their actions say a lot about timberland investments and may well drive up the value of timberland in the future.

We have often written about other virtues of timberland as an investment. Timberland is a unique in that it can be enjoyed by the entire family. It produces a return through timber growth, without regard to the   economic conditions. It also receives favorable income tax consideration through capital gains treatment and property taxes for timberland can be reduced in North Carolina through the Present Use Value Program. A timberland owner can make his own forest management decisions, with the advice of a consulting forester and doesn’t have to worry about the many risks associated with other investments.

If you have an interest in investing in timberland, we believe this is an excellent time to do so. We can help locate the timberland investment that fits your personal goals and guide you through the acquisition process. Give us a call if this type of investment sounds attractive to you.

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