Several avenues exist for an individual who wants to invest in timber. One is to buy shares in forest product companies that own large amounts of timberland. However, these companies typically own material amounts of other assets that tend to dilute or negate the attributes of timber. Pure-play timberland entities also have been introduced in tax-favored forms such as the REIT or master limited partnership, with one—Plum Creek Timber—having a large enough market capitalization to be included in the S&P 500.

Another method is to simply purchase raw timberland directly. While many investors find this option personally appealing, the high cost of a timberland property often prevents obtaining enough to gain an appropriate level of diversification that would prevent exposure to a single market or to biological and natural disaster risks.

As a third option, investors can participate in products offered by a timberland investment management organization, or TIMO. TIMOs allow you to pool resources with like-minded investors to develop a diversified timber portfolio. This avenue gives the individual investor a more direct voice in the strategy and management of the fund while preserving the tax benefits of timber. The surge in institutional assets has nourished a number of qualified TIMOs, each with a unique strategy or approach that offers potential investors numerous choices of professional investment managers.