The Most Profitable Investment

What is the most profitable investment you can make? Real estate? Options? Futures? Surely, it must be Cryptocurrency, right? All of these choices can be great investments, especially if you are smart and do your homework, but they don't hold a candle to what I am going to talk about today.

Photo by Micah Hallahan on Unsplash

The most profitable investments are trees! To a lessor extent, other perennial plants are also great investments but I specifically want to talk about trees because they grow so large, live so long, and can produce so much abundance.

Don't believe me? Lets do a little exercise.

Lets start with one of the most common fruit trees: Apple. Now lets say that you go out and buy an apple tree from a nursery. The trees don't even have to be on sale, just a good variety of apple on a standard rootstock. In my opinion, the standard rootstock is important because standard apple trees not only grow the most apples per tree but they are also hardier, and require much less maintenance. In places with a decent amount of rainfall, you won't even have to water the tree because the roots are so vigorous that they will find the water and the nutrients that the tree needs.

The more popular dwarfing rootstocks produce smaller trees that fruit earlier because the roots tend to be less vigorous. This means they also require more inputs to get a decent yield. They won't live as long either. Commercial fruit growers often use dwarf varieties to make harvesting and maintaining the trees easier. They don't care about inputs as long as they can make the maximum amount of money per acre as soon as possible.

Photo by Nathan Hulsey on Unsplash

You buy a standard apple tree for roughly $60; you could do better but for this exercise lets just say $60. You plant that apple tree in a good location and nurture it a few years to make sure it gets established.

It is probably already 3-4 years old when you buy it and after planting it may take another 3-5 years before it starts to bear fruit. Now, this is where the magic happens. On the fourth year it produces 10 lbs. of apples.

Now ask yourself, how much do organic apples sell for at the supermarket? I would say, $2 a pound is a fair average (Canada prices). Many varieties are more expensive than this but we will be conservative for this exercise. Using this math, in the fourth year you could expect to get a 33% return on your initial investment. (ROI)

(10lbs x $2) / $60 = 33%

 
The second year the tree bears fruit you will likely get more apples. How many more apples is hard to say, there are many factors such as apple and rootstock variety, climate, and soil quality to name a few. Lets just say you get 40 pounds. At $2 a pound your value is $80. That's more than you paid for the tree making the ROI for that year 133%, and we are just getting started!

After conducting some research, I found different estimates of what a standard rootstock apple tree would yield; the lower estimate quoted 4-5 bushels a year. A bushel of apples weighs approximately 40 lbs, so 4-5 bushels would yield 160-200 lbs of apples per year. Now, lets plug the numbers we have been discussing into a chart shall we?

Standard Apple Tree Estimated ROI

Year After Planting	Apples in Pounds	Dollar value	ROI
1	0	0	0
2	0	0	0
3	0	0	0
4	10	20	33%
5	40	80	133%
6	80	160	267%
7	120	240	400%
8	160	320	533%
9	200	400	667%

Photo by Joanna Nix on Unsplash

I am doing a bit of guesswork here but, by the ninth year you own the tree you will be up to maximum production and getting a whopping 667% return. After the ninth year you will probably continue to get similar production for two to three more decades before you start to see a decline in production due to the trees age but even so your tree will still produce fruit.

What other investment can give returns like this without having to liquidate the asset?

I'm being super conservative with these numbers too. You could grow your own rootstock, learn grafting, take scion wood from the first tree (or any other apple tree you are able to take scion wood from) and produce as many apple trees as you wanted for less than $1 a tree. Sure, there is some time required for pruning and harvesting but even conventional investments like real estate or stocks take time. Instead of labour for harvesting and pruning, the time requirements for conventional investments is used for research, renovations, paperwork or whatever else is involved.

Being realistic, capturing the full ROI produced by your apple tree every year would be hard. Even if you just use the apples for your own food and barter you will still capture a lot of the value. Maybe you won't make the full 667% return but I bet you could easily get more than $120 of value out of your tree per year.

If you know any other investment that can make over 100% a year please tell me.

Of course, there are literally hundreds of different trees you could grow. I just used apples because they are so common. There are other extremely profitable trees you could choose from like Black Walnut. A mature Black Walnut tree could be worth $20,000 in lumber value alone and while you wait for it to get that big you, or your children, could still benefit from a nut yield.

Trees also provide all sorts of other benefits that are hard to put a dollar value on. They provide shade, block the wind, are playgrounds for children, capture carbon, purify the air, increase property values and beautify the area. What other investments enrich our lives in so many other ways than just financially?

Hopefully, by now you get the gist of what I am saying. So how many trees are you going to plant this year?

Photo by Anton Darius | @theSollers on Unsplash

Sources

http://www.davewilson.com/question/how-long-do-fruit-trees-live

https://www.unc.edu/~rowlett/units/scales/bushels.html

https://www.starkbros.com/growing-guide/article/estimated-yield-for-fruit-trees

https://www.almanac.com/plant/apples

Thanks for reading everyone. I am grateful for any support you wish to give. As always, comments are welcome and I would be happy to answer any questions you might have.