NOTE: To avoid having to reply to everyone individually, I have created a FAQ regarding the Pinchot Plan.
Our recent article entitled “What the Heck is a Pinchot Plan?” probably left out a lot of potential detail. For one thing, we missed mentioning the Sixth “Pinchot Retirement Investment”, simply because it is a Canadian business and was pretty difficult to sleuth on the web. Talk about not being able to see the wood for the trees!
A good deal of searching has thrown up TimberWest, a company trading on the Toronto Stock Exchange. The ticker on Yahoo! is TWF-UN.TO, on the Toronto Exchange it trades as TWF.UN
According to TimberWest’s website, “Distributions on the Company’s Stapled Units have provided an average annual yield of more than 10% since inception. Given the low-risk profile of the investment, it has been and continues to be a safe haven for investors looking for better than average returns and low risk”. Trees grow fast in Vancouver Island where TimberWest has most of its acreage, which is exactly what you want for maximum return on investment. Sustainable forestry using the Pinchot Model can certainly provide just that.
It’s unlikely that a formal “Pinchot Retirement Plan” actually exists. You probably have to create your own. The most obvious way is to take a portion of your investment funds, say 20-30% and build holdings in each of the six “Pinchot Plan Stocks” within an existing tax-deferred retirement account such as a Traditional or Roth IRA (US), a self-select ISA or SIPP (UK). It’s highly likely this strategy will blow away any employer-provided pension.
To recap, the “Pinchot Plan Stocks” (REIT’s actually) and their websites where you can get lots of investor information are:
- Rayonier, RYN – owns large swathes of timberland in Florida, Georgia and Alabama
- Plum Creek Lumber, PCL – mainly Seattle area
- Potlatch, PCH – Minnesota, Idaho, Arkansas
- Longview Fibre, LFB – Oregon, Washington State
- Pope Resources, POPEZ – Seattle, West Coast US
- TimberWest, TWF.UN – Vancouver, BC
And there you have it. These lumber/timber REITs (Note: Pope resouces is a Master Limited Partnership) should provide you with both capital growth and dividend yields within a tax-deferred retirement account. You can then reinvest the dividends in the same companies or use them to invest in a different strategy. In my personal ROTH (and SIPP in the UK) for example I try to invest 25% in dividend paying stocks, 40% in BMW Method stocks and the balance in Intrinsic Value or low Price/CFO plays as found in the Graham Investor screens.
If Ben Graham were alive today, he’d probably be doing something similar – a combination of defensive, enterprising and aggressive investing.
{ 2 comments… read them below or add one }
I have been reading about the Pinchot Plan, seems too good to be true. I am retired and looking for ways to make money fast. I don’t have any real money and this seems like a good way to invest since it requires small investments of as little as $50.00. How does this plan work? Could you e-mail me details on how to get started? Thank you so very much.
Ruby
Pinchot Plan is not really a stock you invest in. it is a Plan developed by compamies to take advantage of the IRS tax codes, which give great lattitudes in tax sheltering. You can however invest in some of these companies like Plumb Creek (PCL) that happens to be the largest land and timber company in the US. A Pinchot plan is named for the first US Gov’t Forester who ran the Vanderbilt lands and forests. The Pinchot plan allows great tax breaks if you buy lands that are geared for raising and management of timber and the lands. Not only can you raise the timber, but you can manage the lands for wildlife with another great tax break, by also getting conservation easements recorded on the land, which the environmenatal groups will pay you for this easement or right. Not only can you get these tax breaks, you can get Williamson Acts tax breaks from your local county that reduces the land value you are taxed on by 75%. Not bad so far. Now you can also take in investors and so on so it is a plan that has no end. If you buy 1000 acres of good timber lands, this is a start and you keep adding as you need tax breaks and income from the land and timber.