Let's talk money...Jul 27, 2019
What is the return on timber? We're talking money.
What can you expect to get in 20-25-30 years . . .
Think about $10,000.
What type of car can you get with $10 grand today...
what about 10 years ago...
and 20 years ago...
So how do I answer when someone asks me what kind of return they can expect from their timber investment?
6% - 8% IRR on average.
But what does that mean?
IRR = Internal Rate of Return
Which is the percentage of return you can expect in "x" number of years.
(Disclaimer: not the actual definition of IRR)
Investments are often spoken in IRR's because it takes into account inflation (more or less - in the way that since it doesn't provide you an actual $$ amount, despite how money "value" changes, you can still expect that percent return). This way it can be compared to other opportunities.
You can expect less than 1% return on your savings account at the bank.
The stock market is relatively volatile, ranging from negative% to 18%.
Real estate... well everyone knows that is all about location, location, location.
Okay, so again, so what...
So how do I know timber is a good enough of a return for you??
Still don't get it??
Well without getting too deep - full of math and formulas - all of which won't make you necessarily understand anything more -
Understanding what kind of return you need (your personal discount rate) to make it worth your wild is ...
or . . . to be the next 19 and counting family . . .
Only YOU can make the decision of what number is right for you, your situation and your investment. Maybe that number is only a 3% or 4% return for you to invest your money, maybe you need at least 12% to make it worth your time.
Find Out the One Thing I Ask ALL My Students When Just Getting Started as A Landowner.
Whether you plan to inherit land, have recently inherited, or perhaps you're just now ready to get involved, I have a secret to help you make the right decisions no matter your experience, acreage, or location.
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