In a world where markets have seemingly gone mad, an investment that silently builds rich, tax-free returns every day holds special attraction.

A Guest Contribution
By Michael Cobb,
ECI Development

March 29, 2023

Dear Fellow Investor,

People often ask me, “Why did you invest in a teak plantation 23 years ago?”

My answer is simple: “Because the return on investment (ROI) is phenomenal. I want to earn more than 10 times my investment. Don’t you?”

There are other reasons why, and we’ll get to those. But in short, I own teak for the projected 11% internal rate of return (IRR) delivered over 25 years. Nothing I know of beats that in the long term.

When I planted the plantation in 1999, I didn’t have kids. But I figured that I would. Teak was a gift for kids I wanted to have, and then someday too for my grandkids, and their kids, and so on.

Teak timber is a powerful, generational wealth stewardship tool. And you can give that gift to kids and grandkids tax free. Yes, tax free.

A quarter-acre of teak starts at $6,880. Two plantation parcels are less than the $17,000 now allowed by the Gift Tax Exclusion. Buy them teak timberland and you can give your kids, grandkids, and future generations a long-cycle cash-flow machine.

People own teak because it’s something that produces amazing profits to pay for college, maybe start a business, or buy a first home. And it doesn’t stop there. Teak is an investment and asset class that will keep producing generation after generation.

Teak ownership builds a legacy endowment that can be accessed generation after generation. To be frank, I like the idea, even if I’m not around anymore to see it, that my grandchildren will be standing at their college graduation ceremonies happy that their grandfather and grandmother thought about how important they were to them many years earlier and gave them the gift of education.

Teak is a conservative investment, too. It is a hard asset with a 300-year track record of limited plantation supply and growing market demand. Very few products have stood this kind of test of time with solid pricing stability.

Many people think you have to be a billionaire to own teak. Well, most billionaires and institutional funds do hold a significant portion of their assets in timber, but you don’t have to be wealthy to do so. (More on who and why later.)

Let it be said now, though, owning a parcel of plantation teak is in the realm that most folks can afford. And for many, it’s a gift for kids and grandkids, who will appreciate your foresight.

And then there’s this simple fact: If the 300-year track record continues for another 25 years, this investment has the potential to produce a return of nearly $100,000. You have the chance to earn more than 10X your investment amount.

Truth be told, some folks can’t see the wisdom of a 25-year investment. In fact, when I planted my 100 acres of teak in Panama in 1999, I was teased by my colleagues at Rotary when I missed meetings to get our plantation started.

“Where were you?” they’d ask.

“In Panama, looking for farms and meeting with forestry management companies,” I’d reply.

“You’re going to do what?” they’d ask. “I’m going to plant 100 acres of teak trees and in 25 years cut them down and make a ton of money and plant them again.” I’d respond.

“You’re nuts,” they’d say. “Panama? 25 years? Teak trees?

Wow. You’re crazy.”

Here was my answer.

“Look. In 25 years, if I need the money, I’m going to be really glad I did this. Or if in 25 years, I don’t need the money, I’m going to be really glad I did this.”

Let me say that, 23 years later, I am really glad that I did this. Only two to three more years to harvest. Our trees are doing great.

And we’re still planting trees — 100 acres last year and another 100 this year. And we are also buying plantations that already exist. This is where you can jump in too, if you are so inclined.

The bottom line is that you can own teak timber yourself — anything from ¼ acre to tens of acres. You can own “baby teak” with a 25-year time to initial harvest or “teenage teak” with only 10 years to harvest. Better yet, ladder your investment — own some of both and have a return every 10 to 15 years.

Allow me to show you the exciting details...

Clicking the link above will get you two fascinating documents right away. These documents are comprehensive, with all the details you’ll need to see if owning teak is right for you.

One of the best reasons to own teak is the long-cycle cash-flow. This idea of a 25-year time line scares away a lot of investors. But why? The reality is that locking up some small portion of our assets for a long period of time makes a lot of sense. It certainly does to the ultra-wealthy.

The wealthiest families on the planet, the top 1%, have locked up vast portions of their wealth for time frames even longer than this. Many major education institutions, like Harvard, have significant percentages of their endowments in timber. Sometimes 10% or more!

Imagine forestry investments from 1929 through 1950, a 21-year period of worldwide tumult and economic stagnation. The trees owned by investors still grew every day. And then in the 1950s when the economic boom began, those trees were sold into a rising market producing major gains for the family.

Another reason to invest in forestry are environmental reasons.

Consider that increasing population pressures around the globe are adding to massive deforestation of wild teak in the jungle. Teak, specifically, is being harvested 8-12 times faster than it is being replanted. This is already creating a supply/demand imbalance.

As supplies of teak continue to dwindle, the price will likely only do one thing: Go up.

One positive signal in the marketplace is that plantation teak now outprices old growth teak in the marketplace. Note in the chart above the green line (old growth) and red line (plantation teak) crossing over in 2008-2009.

So why teak right now? All the reasons above and then some. Teak has increased in value over 5% per year for the last 100 years. Talk about a track record!

Sadly today, native wild teak is still being logged illegally to feed the insatiable demand for the product. The good news is that it’s getting harder and harder to smuggle teak out of the forests with the advent of phone cameras and instant communications. And the demand for illegal lumber is falling with a consciousness of what cutting old growth jungle means to the planet.

This has produced an interesting effect on pricing as we saw in the chart above. Plantation teak prices now exceed wild teak prices in the marketplace. As less and less wild trees are available, more plantations of teak will be planted.

This is great news for the environment.

But please catch this important point. Because plantation teak requires 25 years to grow, and mainstream investors miss the boat, the gap between supply and demand will only widen.

This is great news for today’s teak investors.

So, here’s the real question: Do you want to leave a legacy for kids, grandkids, great grandkids and/or institutions and charities? Imagine establishing an endowment that will keep giving every 25 years for centuries.

How do you want to be remembered? A gift that produces a wonderful cash flow four times per century has a profound impact on how you will be remembered.

If you have enough money right now for day-to-day living and want to pass along real wealth to the next generation and beyond, teak timber is a great way to do that. Partnering with Hardwoods Unlimited makes access to this asset class easy, simple and affordable for nearly any investor.

For a teak timber guide, reach out. We’ll put one in your hands. Take a look and decide if teak is an asset you’d like to own now and then pass down to future generations who will remember an incredible legacy gift you so wisely made for them.

If you decide to move ahead, you can take comfort knowing that you’ll be joining over 400 folks who have already decided that teak ownership is a great way for them to steward wealth into the future.

By the way, some individuals have purchased the teak plantation parcels directly in the name of a child or grandchild. This is a smart asset protection move and could have positive tax benefits as well.

Click the link below to see if owning teak timber is right for you.