The Race Continues: Economic Growth vs. An Economic Tantrum-Week 12

Factors that Make Timberland an Attractive Asset: 8.  Inflation: In these uncertain economic times, a timberland investment is a great hedge against inflation. Historically, timber values have increased at a rate higher than the rate of inflation. Adding the annual growth of the trees and the combined rate of return on a timberland investment can be powerful. In these uncertain times, it is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

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The Race Continues: Economic Growth vs. An Economic Tantrum – Week 11

Factors That Make Timberland An Attractive Asset: 6. Timberland Helps the Environment: A vigorous, growing stand of timber removes carbon dioxide from the air and produces oxygen. Also, with newer technology the biomass from forests could soon be used on a wider scale as an alternate, cleaner source of energy. In these uncertain times, it is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is land.  ...

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The Race Continues: Economic Growth vs. An Economic Tantrum – Week 10

Factors that Make Timberland an Attractive Asset: 5. Timberland is a Fairly Stable Asset: Timberland does not have the wild “ups and downs” of the stock market. That is why pension funds and insurance companies like timberland investments. Timberland is more like high grade bonds as a long-term investment over ten years or more. Both timberland and timberland investments have good up-side potential if you catch the markets right. Over the long haul, the return can be quite attractive because the trees keep growing if they are managed properly. In many cases a single property has funded college educations or retirement. In these uncertain times, it is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

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The Race Continues: Economic Growth vs. an Economic Tantrum-Week 9

Factors that Make Timberland an Attractive Asset: 4.  Tax Perspective: The profit from the sale of timber and land is a taxable event. In most cases the profit is treated as capital gain rather than ordinary income. Stock which pays dividends are taxed as ordinary income. Land and timber “dividends” are their growth and you do not draw those “dividends” until you sell either the land, timber, or both. Here again you can pick the time that is most beneficial to you to have that taxable event. In these uncertain times, it is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

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The Race Continues: Economic Growth vs. An Economic Tantrum-Week 8

Factors that Make Timberland an Attractive Asset: 3. Timber is a Crop: Even though it has an 18-35 year rotation for harvesting versus an annual harvest for a cash grain like corn or soybeans, managed properly timber has a good rate of return with a periodic income stream from thinnings and a final harvest. Unlike corn or soybeans this crop does not have to be harvested at a set time. To maximize return, timberland should be thinned and harvested within a certain window of time. But that window is fairly broad. Thinnings could have a two to three year window with the final harvest having an even broader window. This allows you to pick the best markets for your timber sales. Over our decades of being land brokers we have seen this increase the final return by as much as 25% in some cases. Timing is everything. In these uncertain times, it is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

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The Race Continues: Economic Growth vs. An Economic Tantrum – Week 7

Factors that Make Timberland an Attractive Asset: 2. “Under all is the land”: Land is a separate asset apart from the timber that might be growing on it. The “highest and best use” of a tract of land may change over time and has a separate value from the timber. The type and amount of timber does have influence on the land value. But a timberland investment offers its owner the opportunity to enjoy an asset that increases in volume yearly, can be harvested periodically, and properly located a tract of land that can enjoy a significant increase in value if the use is changed in the future. In these uncertain times, it is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

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