Invest in your future, then invest in your world.^TM

We have all heard the news reports of the devastation of rain forests, and many of us have thought, but what can we do?  Each of us is so busy in our personal lives that investigating and finding viable solutions to the problem just seems to be beyond us. On top of that, most of us must tie up our money to save for college costs and retirement income. Through a combination of events, we at Finca Leola have been given an opportunity to do something to help and to  diversify our college and retirement funds at the same time. We are hoping that by sharing our experiences, we will encourage others to do what they can as well as assist them, if possible, in their efforts.  Even though we are offering here to grow trees for people, feel free to participate in the discussion and the dream even if you never buy anything from Finca Leola.

What causes an investment to grow? Simply put, an investment grows because its perceived value grows. During the technology boom, people were speculating on the future value of Internet stocks. Stocks were intended to represent the actual value of a company. Unfortunately, in many cases, the real value was not there. Owning stock is owning a piece of the company; if it does well, you do well, and vice versa. Bonds are a much safer investment, but they only return the interest that institutions are willing to pay. If interest rates drop, so do your returns.  We are not financial advisors; these are just our personal observations.

People do invest in other things besides stocks and bonds. Imagine that several years ago you went out and bought a piece of land in New Jersey for $3,500. Then you built a small house. Over 25 years, your family grew, so you kept adding to the house. As your income rose, you invested in landscaping and a pool. Now, after 25 years, you decide to move, and you discover that your $3,500 land is now worth $300,000! What happened?  You added real value to the property with your improvements, plus the market value of land in the area increased. If you did all of the work yourself, this would represent considerable profit—and some people do this as a way of life. Constantly fixing up your property is a lot like working two jobs. Wouldn’t it be great to invest in something that grew like this without you having to work at it?

There is an investment that does—trees! The advantage to investing in trees is that trees grow. If you plant a black walnut tree today (cost—nothing except the land), in about 50 years, it could be worth over $1,000, even if the cost of wood does not increase. Why? Because the tree itself increased. It is big enough now to be turned into lumber, and the right kind of lumber is worth a lot of money—just remember the last time you were in a furniture store. In tropical climates like Costa Rica, trees grow much faster; in fact, marketable wood can be harvested in as little as 6 years.

We can grow trees for you in here in Costa Rica.  We will plant your tropical hardwood trees for you and take care of them just as we do our own. Because the tropics make up a very narrow band of the world, there is a very limited supply of beautiful tropical hardwoods, which are in high demand. As we know, if the demand is high and the supply is low, it means you make money. And as a very important side benefit, you help the environment. And after the land has produced valuable lumber, it will gradually be brought to protected rain forest that no one can ever sell.

We are not the only company growing tropical hardwoods for investors. During the last 10 years, one such company has planted over 1.5 million trees for more than 1,000 investors. A base fee is charged for growing the trees, including the cost of acquiring and maintaining the land (their current price per 100 trees is just under $5,000). The trees need to be planted close together so they grow straight and tall. This produces the best kind of wood. Every few years, some of the trees have to be cut so that the remaining trees have room to grow. These thinnings are valuable and can be sold. At each of these interim harvests and at the final harvest, the company receives a small percentage as their profit. Because the trees get bigger and the price of hardwood continues to increase, the internal rate of return for the investors is, conservatively, more than 20% per year over the 25 years that it takes the trees to mature. The stock market tends to return about 10% annually over the same time period.

For $4,500, you can own 100 tropical hardwood trees that we will select and plant for you in some of the most fertile terrain in Costa Rica.  Let’s look at the real dollars and cents of how this works. The following table shows a conservative estimate of the profit over 25 years, using 6% as a yearly increase in the price of hardwood. These numbers take into account all the costs to harvest and sell the trees. Also shown is what the same money would do if you invested it in the stock market and left it there for 25 years. Note: We are not financial advisors. It's up to you to do your own research and evaluation to determine if you wish to invest in any reforestation project.
 

(The values in this table are based on our particular microclimate, soil, and procedures, so it's only fair to tell you—if you plan to create your own plantation, do not expect these results in most locations.)

We have kept this simplified to make it easier to understand. Let’s break it down a little.  

Culls: This number represents a reasonable number of trees that don’t make it for one reason or another. The number could end up being lower, because for the first 3 years we will replant any tree that does not do well, at no additional cost to you.

Years: The first harvest is generally between 6 and 8 years. If the market is depressed one year, you can wait for a year or two, so that you don’t have to sell in a bad year.

Trees Harvested: At the end of 25 years, all of the trees will have been harvested.

Intrinsic Value of Wood:If you could magically turn seedlings into older trees today, this is what they would be worth. It is the value of the tree growth if the price for hardwood does not go up at all; it is not based on speculation on the future price of wood.

Inflation Value of Wood: This is a reasonable (actually a low) increase in the future price of wood. Only 1% of tropical hardwoods come from tree plantations, but by the year 2030, we will not be able to get them anywhere else. There are not enough plantations in existence today to meet the future demand—remember, it takes years to grow a tree, even in the tropics—therefore, the price will most likely shoot up. Even now, many hardwood prices are increasing by about 10% per year, which would more than double our figures for your return from this investment.

Total Future Value: Intrinsic Value + Inflation Value. Unlike in the stock market comparison, a lot of the money is returned before the 25th year.

Stock Market: We have included this figure just for comparison. Over 25 years, the stock market has historically averaged below 10%, if all of the money is left in.

Click here if you want  more information about owning trees with us.

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