Investors are reevaluating their portfolios in the wake of the coronavirus pandemic. Some may be heading for the hills! Perhaps that’s exactly what they should do.
The productive hill country of Wairarapa is 90 minutes from Wellington. There, tens of thousands of hectares of sustainable forestry are grown and tended by New Zealand’s most successful forestry investment manager, Forest Enterprises. For nearly fifty years, the Masterton-based company has been growing wealth. Literally.
Those who had the foresight to invest in the ‘90s are seeing good returns. Forest Enterprises has paid $56 million in harvest income to its investors in the past three years alone.
Think retirement, a first home, or maybe an education fund. Wood is renewable, natural, and New Zealand excels at producing it. It provides income in the long term, and forestry investment performance is not correlated to the share market.
Here are a couple of typical forest investors.
Paul and Carol from Wellington started investing in forestry in the ‘90s.
“We are big believers in diversity”, says Paul. Forestry makes up about 25% of the couple’s total investments. As well as owning their own home, they invest in KiwiSaver, shares and managed funds, and their own businesses.
“Having survived the 1987 share crash, the 2000 tech crash, the financial crisis of 2007-8 and leaky homes, we’re now navigating the outcome of Covid-19 and it is important not to have all our investments in one asset.”
When Paul first invested in forestry, retirement income was top of mind; New Zealanders had just voted down a compulsory super scheme. Around the same time, marginal erosion-prone farmland was being planted in trees as superior land use, which for Carol was a no-brainer.
Andrew and Nicola from Carterton first invested in forestry two years ago. Andrew confesses, “we should’ve invested much earlier; we’re approaching 50!”
The couple invest in shares, investment funds, KiwiSaver and have their own home. “Forestry investment appealed because it’s long term and not affected by share market or property performance.”
“We also like that forest ownership is tangible. We can get out and visit ‘our’ forests while we wait for the income. Our investment is forecast to provide a strong financial return as well as perform ethically and environmentally.”
A Forest Enterprises investment includes land as well as trees. “As a property professional, I consider land ownership an important component of an investment.”