Investing in a
teak plantation year 2007 was my very first alternative investment. It was
exciting from the very beginning, starting with convincing my girlfriend about
the great advantages this investment had to offer, since I didn’t want to take on
the risk alone... The investment time is very long
(20 years), so my girlfriend and I made a huge commitment back then to each
other (even though a 2nd hand market for the investment exist, but
will most likely not generate as good ROI as sticking to the original
investment plan). Apparently she is happy both with the investment and me,
since we are now married and have a wonderful baby!
This investment
company (Teak Invest, http://www.forwood.com/en/) started actually quite early with teak investments, around
year 1999/2000. Already back then I was keen on investing with this company,
but since a capital growth rate of about “only” 10% was predicted I chose to
continue with stock investments, where I had a significant higher capital growth
rate thanks to my successful investments on the stock market.
One of the
reasons why I later on chose to invest in this alternative investment is that
it has a steady growth pace and is less volatile than the stock market. I used
to do quite well for an amateur investor on the stock market, thanks to being well
informed about stock market opportunities as well as the micro- and macro
conditions affecting the stock market. However, I had some changes in my life
that distracted me from the stock market information flow, which made me
rethink my investment strategy. In order to be on top - and stay on top - when
investing in stocks you need to be continuously well informed about what is
happening with your investments. Bad news on the stock market can quickly affect
the value of your investment negatively. I needed an investment type with
slower pace, both information flow- and volatility wise. Therefore I found the teak
investment as a great opportunity: stable growth and I did not have to be on
top of the information flow (as there is not much information to consider and
act upon).
So far I am
very happy with my investment. I get regular updates about the plantation and apparently
the plantation I invested in is the most prosperous among Teak Invest’s
plantations this far. Hopefully it continues like that! In terms of return I am
also content. If we assume that the investment grows with 10% per year this
would give us, now 5 years after the investment, a return of 61%. However, I
actually bought the investment during a promotion where I got 10% off the
regular investment price. Considering this fact I have made a 79% increase of
my investment this far, assuming that the real value of the investment still
was the original price without promotion. Not bad at all!
One perk I
really appreciate about this investment is the opportunity to visit the plantation.
The investment company has regular trips to the plantation and I plan to make a
trip to see my investment in a few years together with my family, combining it
with vacation. I think the teak plantation visit would be a terrific way to teach
my children about getting interested in the private economy and understand
different ways to saving and investing their money.
Tectona Capital
(http://www.tectona.se/) is another investment company offering teak plantation investments in Panama (for
as little as 5 500 kr, i.e. about 600 EUR). I have followed this company for
a while and it seems to be doing well and has expanded its business, which
always is a good sign for successful companies. Tectona Capital also offers a
property fund investment, focusing on the Panama property market. I will write more
about property investments later in my blog, so stay tuned and subscribe to
my blog, don’t miss out these interesting stories!
There are some reasons why timber should be considered as an alternative investment. These are the increase in demand; a hedge against inflation; satisfactory ROI; low correlation to other asset classes; and the like. All in all, the most compelling reason for this is the timber’s ability to enhance risk/return characteristics.
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