Investing In Timber: 10 Tips

Curious about investing in timber and 10 tips to get you started using timber as an investment? There are many different ways to invest in timber, and some will depend on the amount of cash you can commit. You should diversify your timber portfolio by buying several different investments. Be sure to research each investment vehicle before you make your buy.

  1. There are timber Exchange Traded Funds, or ETFs, that you can buy. ETFs have a number of timber stocks built into the price, which spreads your risk.
  2. Buy stock in a timber company. You may want to buy several different timber stocks in order to diversify your timber holdings.
  3. Timber Investment Management Organizations, or TIMOs, are another option. These require a substantial amount of funds, as well as a minimum term commitment.
  4. Invest in a timber Real Estate Investment Trust, or REIT. There are dividends and tax incentives that can make an REIT a solid addition to your portfolio.
  5. Buy a timber mutual fund. A mutual fund will help you diversify your timber investments over a broader range of companies.
  6. Use a timber investment to hedge your overall portfolio. Buy several different timber stocks, a mutual fund or use an REIT to hedge your portfolio.
  7. Buy some actual timber land. You do not have to buy an entire forest; decide what you can afford and see how much timber land the seller will offer you for your price.
  8. Invest in a private timber company. You will need to thoroughly analyze the business plan and financial statements of a private timber company before you commit any funds.
  9. Invest in timber on a monthly basis. This will help average your cost, since you will make your purchases in monthly increments.
  10. Monitor your timber portfolio daily. Keep some cash in your account, so you can buy a timber product if there is a drop in prices.
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