Your Parents Were Wrong: Money Does Grow on Trees – Understanding Timberland

We’ve all heard the old adage, “Money doesn’t grow on trees.” I know I certainly heard it a few times as a child from my parents when I wanted a little cash to buy some frivolous thing. We’ve all been more or less indoctrinated into the thinking that money doesn’t grow on trees. The reality, however, is quite the opposite, investing in timberland that what you’ve been taught is wrong, and that money really does grow on trees.

Timberland, or as we could potentially refer to them, “money forests,” are very real, and exist in our world today. And here’s the best part; you can have your very own money trees. As crazy as it sounds, you yourself can easily (and affordably) become the proud owner of your very own plot of money trees. Timberland is an incredibly in-demand resource and one that can lead to incredible wealth and prosperity for those who act decisively and secure their stake.

 

But How Does Timberland Perform?

Timber is one of the best performing asset classes today. Historically, it’s also one of the best performing asset classes of the past century. It has risen in value steadily but drastically with the world’s growing population, beating out the S&P 500 since its inception last century. Timber is also an investment that has proven itself many times to be resistant to economic slowdowns. During the Great Depression, for example, stock prices dropped 70% while timber prices actually rose an astounding 233%. And once again, in America’s most recent economic downturn, the Great Recession of 2008, the S&P 500 tanked by 38%, while timber actually gained 9.5%.

 

This only makes sense. While other investments like stocks are inseparably connected with the markets, politics and the media, timberland knows of none of this. A bubble bursting or a scandal can have massive ripples throughout the economy, hindering the growth of most financial assets. Timberland isn’t like this. Timber products are planted in the ground and will keep growing no matter what happens in the global markets.

 

What Makes The Difference?

While the sorts of things that affect the growth of other investment classes don’t affect the growth of timber, certain economic variables can affect the price of timber. However, these effects are to the benefit of timber owners. Timber prices have seen incredible growth over the past several decades, with timber prices rising an average of 15% since 1987, and beating the S&P’s average growth in that time of just 11%. Timber prices are also expected to grow even faster in the future, as the global supply of timber products falls while the demand rises.

 

Timber is also one of the favorite safe havens of investment for some of the world’s wealthiest families. The Irving Family has $400 million in timber investments, while the Pingree heirs have $240 million invested into the timber. Archie “Red” Emmerson, who made his fortune in forestry, beats out all of the others, with an amazing $1 billion invested in timberland.

 

 

Timberland has also been getting much applause from knowledgeable investors and money managers. Jeremy Grantham, Chief Investment Strategist for GMO, a private investment firm which today manages over $100 billion in assets,has said, “Timber is a perfect investment…it’s a lot safer than stocks. And as long as the sun shines and the rain rains, trees grow.” Others have expressed praise for timber investments, such as Jane Mendillo, the CEO of the Harvard Management Company, which currently has 10% of its $30 billion endowments invested into the timber. Mendillo has said, “What I want is properties that produce something that the world is going to want more of, and the increase in the supply is difficult…timberland is the perfect example.”

 

Why Am I Just Learning About This Now?

Timberland is the secret that the world’s wealthiest families and individuals have been using for over a century now to secure and grow their personal fortunes. These wealthy individuals will certainly want to teach their children the value of a dollar, but I doubt they will do it by spreading the false narrative that money doesn’t grow on trees. Money invested in timberland grows every day.

 

Timberland really is one of the best investment opportunities out there today. Whether it’s the history of strong growth, the indicators that suggest even stronger growth in the future, or the stability of the investment, timberland is an investment to consider. So the next time you hear the old adage “money doesn’t grow on trees,” you might want to think twice before agreeing with it. Money grows on trees every day in this world, and the people who own those trees are the ones who get to profit.

 

In-demand, yet of dwindling supply in the marketplace, Teak is a remarkably valuable hardwood that is extremely durable, practical, and beautiful. To learn more about this opportunity please watch this special presentation by Rachel Jensen and Mikkel Thorup.