The forest fund is a project aimed at promoting the development of various sustainable activities, introducing more advanced technologies to the forestry sector.
Through this initiative, it becomes possible to train individuals to combat wildfires and deforestation, protecting naturally growing trees while enabling companies to boost their profits through reforestation.
This type of investment has become increasingly popular worldwide, serving as an incentive to create new forested areas that benefit the planet and, consequently, the global population.
What Are Forest Funds?
Forest funds are an investment option often sought by companies aiming for good returns through reforestation. These funds are typically commercial in nature and widely used by industries across various sectors.
Forestry assets emerged in the 1980s in the United States, with large companies investing in forest land purchases to supplement their wood production demands.
How to Invest in a Forest Fund
Today, there are several ways to invest in a forest fund. However, contrary to common belief, the investor’s profile is not the only consideration—it is also crucial to determine the type of asset you wish to acquire.
Forest funds can include:
- Natural and semi-natural forests managed for timber production;
- Planted forests, primarily focused on timber production;
- Non-timber products;
- Biodiversity conservation.
Each model offers unique advantages, which must be carefully evaluated to ensure the investor selects the most suitable option.
Individuals who already own rural land, for example, are ideal candidates for this type of investment, particularly for planting tree species independently.
How Is Independent Planting Carried Out?
Planting trees and plants independently requires consideration of several key factors.
The first step is to ensure land certification, as this verifies that the soil is suitable for the process. With this certification in hand, the landowner can identify the best types of trees to cultivate, ensuring optimal results.
What Is Forestry Crowdfunding?
Forestry crowdfunding is another way to invest in environmentally focused funds. Also known as collective financing, this investment model has proven effective for resource acquisition by directly engaging investors.
Even individuals with limited investment experience can participate in forest funds through crowdfunding.
In this model, the investor purchases securities, and the funds are allocated to planting trees and plants. When the trees reach maturity for harvesting, the timber is collected and sold. The investor then receives a share of the profits from this transaction.
Benefits of Forest Fund Investments
Now that you understand what a forest fund is and how to invest in one, it’s time to explore the benefits that can be gained from this type of investment.
Contrary to popular belief, forest funds are not just for industries; individuals can also take advantage of this market. These assets are highly advantageous for long-term investments and are considered low-risk. However, there are many additional benefits to this type of transaction. Let’s take a closer look:
1. Protection Against Inflation
Investing in forestry assets offers financial returns with minimal risk of loss and low volatility. This makes it an excellent solution for mitigating the risks inflation poses to investors.
Additionally, forest funds diversify portfolios for companies and industries, reducing the overall risk of their investment holdings.
2. Security for Investors
Although the forestry market is subject to fluctuations, particularly due to raw material prices, forest fund investments provide a level of security.
In cases where market conditions are unfavourable for timber sales, one of the best strategies is to delay harvesting until market conditions improve, avoiding losses and preserving value.
In the meantime, the trees continue to grow and increase in value, benefiting the investor.
3. Capital Preservation
Finally, forest funds offer strong capital preservation for investors.
Regardless of market conditions, which are beyond the investor’s control, the value invested in these assets can be maintained over extended periods.
This makes forest funds an excellent choice for both large and small investors, delivering good results with minimal risks for those interested in participating in this market.
