African trees – a socially responsible investment with Better Globe

 

 

 

 

 

 

 

I have a nephew that was born recently. He is a handsome young man, named John after my grandfather, and I have been looking for a gift worthy his cute smile and great name. I gave his brother an investment in a stock fund a few years ago after a suggestion from my sister, but the fund hasn't increased very much. So for John I decided to give him an alternative investment - an investment in African trees! Again, this is one of those investments with a long investment horizon but I figured if someone can wait for the money, it is a newborn!

I invested with Better Globe (www.betterglobe.com), a company that started year 2006 and operates mainly in Kenya. The business and investment idea is to plant trees in Africa and sell them to companies and private investors. The company market their product as “prosperity with purpose”, hinting that it is not only trees that the investor invests in, but also in the future of Africa. And Africa definitely needs help; every day 30,000 children die from a combination of disease-infested water and malnutrition, and only 57 percent of African children are enrolled in primary education - one in three of those does not complete school. The list can be made long for all the help Africa is in need of.

Therefore Better Globe combines an investment with help to Africa by offering gift- and donation tree packages for a low cost. In the gift package for only 17 Euro (about 23 USD), you get:

·         Two Better Globe trees to the gift receiver with a profitable return

·         500 liters of water for locals

·         1.5 Euros for school building

·         1.5 Euros for microfinance operations

The planted trees of Better Globe are a mix of acacia senegal (gum arabic) and mukau (tropical hardwood). Acacia Senegal has a wide usage and is used among others in Coca-cola, food and candy. The mukau tree can get 20 meters high and is very suitable for construction purposes and furniture.

 

So what’s in it for John?

Better Globe manages the trees on the owner’s behalf for 20 years until it is ready to be harvested. From year five to year 20 you will get a yearly 15% return on your invested money (paid out every 5^th year). So if you buy a donation package for 17 Euro you will in 20 years receive 191 Euro. Sounds pretty good to me. But does it work? Well, we’ll see in five years when the first payment is due. I do have my hopes up. There is a blogger, Jan Bolmeson, that claims that he has received his first payment and he seems trustworthy (see http://www.rikatillsammans.se/om-rikatillsammans for more information). He is actually also a representative for Better Globe so he might be a bit biased but I have read quite a lot about him and he seems a person I can rely on.

Being a Better Globe representative, an ambassador, is a nice perk for anyone who wants to become a part of this organization – and there is some money in it for the ambassadors as well…

 

 

 

 

 

 

 

 

 

 

 

 

If you liked this post, please click on “like” on the red Google+ sign (“g+1”) on the top of this page, thanks! 

 

/Chris

 

Teak investment Belem Sky in Brazil with Emerald Knight Consultants and Global Forestry Investments (GFI)

 

 

 

 

 

 

 

 

Brazil is a popular country for alternative investments. It has a politically stable environment and a fairly strong and growing economy. It is one of the top ten largest economies in the world, and one of the famous BRIC-countries with a relatively high GDP-growth.

This investment (which I made in year 2012) is in a teak plantation in Brazil. The investment broker I used was Emerald Knight Consultants, a British company specializing in providing sustainable and ethical investments with high returns. The company is only marketing investment products and the contract is signed directly with the product provider. In this case, the product provider is Global Forestry Investments (GFI), a timberland investment company focusing on sustainable forestry investments. GFI also has a long term goal to help the local community in Brazil by working together with the local government and plans to build a school for the locals. GFI has offices in Brazil, UK and Dubai.

The teak plantation is located in Belem, in the region Para north east of Brazil, and the investment project is named Belem Sky plantation. I have purchased 0.1 hectares where around 100 trees are grown, managed by GFI with partners during the investment period. The trees are already eight years old and the plan is to do the final harvest in 15-18 years. There is an option to resell the trees after three years to GFI with a capital uplift of five percent. During the investment period there will be thinning of trees (selective removing trees to improve growth rate of remaining trees) around four times, which will provide extra dividends the year after the thinning since the removed trees can be sold. The expected average return is 10% per year over the investment period.
 

 

The figure above shows the Belem area by Google maps, marked with an “A”

A few years ago I invested in another teak project, in Panama. So why do another one? Well, there are two main reasons. Firstly, if I invested in this teak project through Emerald Knights, I would get access to another more lucrative investment (more about this investment in a later blog posting). Secondly, timber has historically been a very safe investment class with good returns. The teak price has increased steadily over the past 20 years and has a broad usage within both industry and private consumer industry. Also, teak is resistant against fungus, insects, fire and challenging weather conditions, making it a sturdy timber class.

 

The photo above illustrates how timber has shown attractive returns over the years in comparison to other investment classes (figure from Emerald Knight Belem Sky investment prospect)

It all sounds pretty good but how has this investment performed this far?

I was initially excited about this investment - pretty good returns and investing in something that brings something good to the locals in Brazil. The returns from the thinning process 2012 (around 10% of initial investment) were going to be paid out in January this year. Unfortunately this didn't happen and there was no communication about it from GFI until March when I emailed them and asked for the returns... The reason was apparently that it had been severe weather in the Belem region with heavy rainfalls that had delayed the thinning process. It seemed to be a fair explanation and I would have been ok with this little hiccup in the investment process but the payment delay continued. And continued... I still haven't received the promised payment and now it is eight month delayed! GFI has come up with more reasons for the delay but all is perceived as quite unprofessional to me. Emerald Knight has recently established a specific email-address for questions related to this issue so there seems to be quite a few investors experiencing the same problem... Maybe it is the first time GFI has this kind of project and I and the others investors waiting for money are “guinea pigs”? I hope not, but it sure seems that way. GFI has promised a compensation for the delay but I will believe it the day I see the money. My wife is quite pissed at me since I invested our common money and she is nagging me about it every other day – so I really hope I will see that money soon, especially since she doesn’t want to discuss new investments until I retrieve the funds!

 

Investment summary

 

I will update if and when I receive my funds, so stay tuned and subscribe to my blog (at the top right on my blog) - don’t miss out on more interesting stories!

Eucalyptus forestry investment in Brazil with Greenwood Management

 

One of the investments I made last year must be one of the most difficult to spell: Eucalyptus!

Eucalyptus is a type of tree that is very common in Australia and was introduced to Brazil in 1910, for timber substitution and the charcoal industry. It has thrived in the local environment, and today there are around 5 million hectares planted. The wood is highly valued by the charcoal and pulp and paper industries. Brazil's plantations have world-record rates of growth, typically over 40 cubic metres per hectare per year, and commercial harvesting occurs after year 5. The local iron producers in Brazil rely heavily on sustainably grown Eucalyptus for charcoal; this has greatly pushed up the price of charcoal in recent years. The plantations are generally owned and operated for national and international industry by timber asset companies such as Thomson Forestry, Greenwood Management or cellulose producers such as Aracruz Celluloseand Stora Enso (Source: Wikipedia.com).

This particular investment has been made with Greenwood Management, which is one of the leading forestry asset management companies in Europe. Greenwood Management has offices in several countries in Europe such as Denmark, Spain and Portugal but also in North America (Canada).

The investment idea is to have private investors to invest in large scale forestry operations. In this case Eucalyptus in Brazil, and during the investment period (6-8 years) Greenwood Management will actively manage the investment. Once the investment period is over, the Eucalyptus will be used for char-coal.

According to the investment prospect, the Brazilian congress has recently passed a law that required all steel producers to use char-coal from non-native species instead of using the fossil fuel coking coal, in order to lower CO₂ emissions. And the use of charcoal made from naturally growing native trees will be banned to combat deforestation. The underlying profitable assumption for this investment is that the price of charcoal made of eucalyptus will increase.
 

I have this far had a positive impression of Greenwood Management. The initial investment process was easy, the account manager was professional, and I have this far received several newsletters describing the progress of the investments and Greenwood Management’s co-operation with local university focusing on agriculture. However, if I would have been them I would have given me calls more often (I haven’t received any since I made the investment) to try to sell more investment products! But on the other hand, it is nice with a company not pushing the investment portfolio too much. Also, a referral scheme has been available which could be beneficial for the investor if he/she has friends that might be interested to invest!

Investment summary
Investment level (Low: 0-5 000 EUR/7 000USD, Medium: 10 000 EUR/14 000 USD, High: >10 000 EUR/14 000 USD)	Medium.
Risk (low, medium, high)	Medium. In general forestry investments are considered low risk, but the char-coal prices have fluctuated quite a lot during the past. Since the investment is based on this parameter I see this as a medium risk.
Estimated ROI per year	Around 11%.
Length of investment (<1 year short, 1-5 years medium, > 5 years long)	Long. Around 5-7 years

 
I will keep you updated on my blog about the progress of this investment since I still have a few years to go before the investment is done. So stay tuned and subscribe to my blog (at the top right on my blog) - don’t miss out on more interesting stories!

Note: photos above come from the Eucalyptus investment prospect of Greenwood management

 

A successful forestry investment – investing in Baltic forest with Europiska skogsfonden (The European forestry fund)

Forestry is one of the more common ways to invest in when it comes to alternative investments and there are a lot of prospects out there. I can see why this investment type is popular. One of the major advantages is that forestry is considered to give a steady and predictable return. +10% annual returns are not unusual. The predictability of the returns is highly appreciated in the current volatile financial market. Looking in the rear-mirror, forestry investments has in general outperformed the stock-market the past decade - with lower risk!

Investors need to have a medium to a long term investment perspective (from a few years to decades), depending on the type of forestry and investment type. I have personally invested in several different forestry investments and you will be able to read about all about them in my blog (I have written about my teak investment in a previous posting).

This post is about my investment in a fund investing in Baltic forest. I have invested with www.euroforest.se  (Europeiska Skogsfonden – The European Forestry fund), a company specializing in investing in forest in the European Union with a focus on Eastern Europe. Two of the company’s important reasons why this would be a good investment is that forest in the Eastern Europe is cheaper than other countries in Europe and therefore has a potential higher price development, and secondly, best practice forest maintenance is applied which contributes to higher returns. The predicted return on this investment is 10-12% per year, of which 2-5% is yearly dividends. This far the fund has delivered as following:

Development in percent (dividends within brackets)

2011	2012	2013	Since the beginning
+13,2 (3,2) %	+12,4 (1,5) %	xx,x (3,0) %	+34,3 (7,7) %

Figures from: http://www.euroforest.se/historik 

The goals for return on investment have been exceeded every year, giving investors 34,4% since the start – not bad!

I invested in a closed fund that was set up in 2010 and will be locked for five years in total. Hopefully the remaining years will be just as profitable! The fund is regulated by the Swedish finance authorities, which for me is a proof of quality and that everything is managed correctly. Good to know so I can sleep well at night J 

If you consider investing in this fund or a similar one, make sure you don’t need your money during the lock-up time. Also, the minimum investment is often quite high, in this particular case it is about 5 000 EUR.

Next time I will write about an exciting investment I recently have made in Brazil. So stay tuned and subscribe to my blog (at the top right on my blog) - don’t miss out on more interesting stories!

My alternative investment in teak plantation, Panama

“Timber is one of the safest and steadiest growth investments available, protecting an investor in times of inflation, and providing returns that have beaten almost every other investment sector over the past 40 years. Teak in particular offers one of the best values and highest yields in the timber sector. It is a small niche segment of the timber industry and is managed by smaller, privately owned companies rather than by big institutional operators…” (read more about teak investments on http://www.nuwireinvestor.com/howtos/evaluating-teak-and-timber-investment-opportunities-53585.aspx)

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 2^nd 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!