How to Start Your Own Pinchot Retirement Plan

2007-02-01 20:35 | Posted by The Graham Investor | Permanent Link | General

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.

Comments

2007-11-05 16:33 | Posted by Walt

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.

2007-06-28 09:54 | Posted by Ruby deBraux

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

450.00

2007-06-22 03:27 | Posted by Kathrina Oloyede

I am a 47 year-old Nigerian woman. I am always fascinated by the prospect of the Pinchot Plan. Is there any way those of us outside America can benefit from this wonderful plan?

Thanks.

Kathy

2007-06-07 09:16 | Posted by Dr. Hector L. Roche

I'm really interested in Pinchot plan. please send more info and application to start investing in the plan. thanks HLR

2007-05-05 12:16 | Posted by Darryl Kuechler

Will Brookfield Asset Management , the firm taking over Longview maintain Longviews existence as a REIT?

2007-05-03 21:26 | Posted by The Graham Investor | http://www.grahaminvestor.com

There is no "Pinchot Retirement Plan". It is just a name given by some newsletter publisher to their blurb that plugs investing in a particular type of stock, which anyone can do on their own through a broker. I have given a list of the stocks here. There may be others, but I don't know what they are.

2007-04-25 08:50 | Posted by drake wittekiend | safari

please send me details how i can start investing in pinchot retierment plan to my email add - dwittekiend@fletchermartin.com

2007-04-20 15:13 | Posted by judy pea | safari

999,999 times out of a million..or more..if it sounds too good to be true, it is too good to be true. downside is not stated..such as using trees loing before thry regrow. selling off land. or that sometimes dividends cannot be paid. why not state all the true facts so investors made make informed choice.

2007-03-18 12:37 | Posted by A. McDonald

Another note on Timber West: the company was a hot recommendation among income-oriented investment newsletters awhile back, because it seemed like a guaranteed source of high, regular dividends. But Timber West's own web site/financials show their product sales have been stagnant; and the dividends they paid out to investors were actually earned by selling large chunks of their land to real estate developers. Timber may be a renewable resource (hence the reference to the Pinchot model), but land is not. And even cannibalizing their own productive base is unlikely to insure Timber West can keep on paying investors. They skipped at least one dividend payment in the past year. Need to dig into the financials to find out where the dividend money is really coming from.

2007-02-28 11:26 | Posted by The Graham Investor

Jack -- Master Limited Partnerships can be held within an IRA. The $1000 limit applies to distributions you collect from all MLPs held within the IRA in a tax year. Above that limit there may be penalties.

2007-02-22 00:55 | Posted by Jack Smith

Isn't putting a MLP in an IRA a No-NO? I believe that there is a $1000 limit w/o penalty.

Thank You

Jack Smith

2007-02-12 19:56 | Posted by Robert Bowden

The Pinchot Retirement Plan sounds very interesting. However, in the NewsMax article on this subject (which is what led me to your website), the statement is made that the Pinchot Retirement Plan is safe from "the war in the middle east" and "from terrorism" because "trees don't care". While I do think this plan is a good thing and pretty safe, that type over-stating of the position, sounds like a used car salesman speech. We all know that our economy will falter if there is a terrorist attack of some kind. This will make it difficult to SELL investments, therefore the Pinchot Retirement Plan dividend return will be negatively impacted, just like every other investment. So, while it may be safer than most investments, it still requires a buyer, in order to pay those great dividends.

Again, I'm interested, but skeptical, now.

Trackbacks

Trackbacks are closed for this entry.

The Graham Investor

Sections

Personal tools

gi stock quote

How to Start Your Own Pinchot Retirement Plan

Comments

Trackbacks