A recent blog By Kevin McElroy of Wyatt Investment Research looks at whether timberland is a better long-term asset class than gold. iPaulpownia believe it is, for a number of reasons.
First of all, it’s important to establish that timberland performs better for investors than the stock markets. Some might disagree with this, but the facts speak for themselves. Bank of America statistics show that between 1991 and 2010, timberland’s average annual returns totaled 11.16 per cent. This compared with average returns of 9.03 per cent for the S&P 500 Index.
It’s easy to see why timberland has become so attractive in recent years – it withstands economic slumps and even full-blown recessions. Therefore, we don’t tend to agree that gold is a better commodity to invest in if you are purely looking for an asset glass that will retain its value in the face of adverse economic conditions – timber will too!
In fact – let’s take another look at the statistics. While timberland was generating an average of 11.16 per cent returns, gold was only generating returns of 7 per cent. Timberland is also a good asset to have at times when inflation is rising and is not correlated closely with other economic factors. It held its value during the Great Depression and it looks like it has held its value again in recent years.
Now, with an economic upturn more likely on the cards, the value of timber is expected to rise further over the coming years. As a result, timberland investment is a good bet for short-term, medium-term and long-term investments strategies.