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Community forestry was initiated four decades ago in Nepal, with the aim of conserving forests and providing basic forest products to proximate households for subsistence use. Many resources were invested in improving the well-being of local communities, especially through the selling of forest products. However, there is limited knowledge of how this investment contributes to well-being. Following the concept of economic goods, this paper elucidates how community forest investment in different taxonomies of goods contributes to households’ well-being. A statistically representative (n = 377) household survey was carried out in the Terai and mid-hills, representing different income groups (low, middle and affluent), along with focus group discussions and key informant interviews in two community forests. The data collection was supplemented with an analysis of community forest-user groups’ records and their interactions with stakeholders. Two-stage statistical models were developed to explain the effect of the investment in different taxonomies of goods to household well-being, where economic factors were confounded in the first stage, followed by multinomial regression. Investment in private goods, especially in income and employment-generating activities, positively contributes to household well-being. In contrast, investment in public and common goods may not necessarily contribute to well-being, emphasizing the need to identify goods that positively contribute to the household well-being. We argue that appropriate policy reforms should be made to prioritize investment in private goods by the community forest user groups that maximize the contribution of community forestry to human well-being, especially that of low-income households.