As the world moves towards a greener future, more and more people are looking for ways to invest in green energy. According to independent research firm Morningstar, the number of index funds and sustainable exchange traded funds has more than doubled in recent years, as has the money invested in them, giving sustainable investors more options as to where to invest. When it comes to investing in green energy, it's important to consider the types of investments you already have. For example, is most of your portfolio already comprised of individual stocks? It's a good rule of thumb to limit your exposure to individual companies.
Diversified investments, such as mutual funds, are often a good option to make up the majority of your portfolio. Investing in renewable energy in individual stocks is another way of exposing yourself to this sector. They can be companies that produce energy through wind turbines or solar cells, or they can manufacture the metals and other products needed to ensure that these products can be developed. If the company you invested in closes, you lose the value of your investment, but you generally won't lose more than you invested, unless you use riskier trading strategies.
Remember that when you invest in stocks, mutual funds or ETFs, your capital is not protected and you could lose it. Another option for investing in green energy is investing in funds that replicate the performance of a stock index specializing in clean energy. These range from buying shares in individual companies to investing in funds that track an index. Recently, countries such as the United Kingdom have made new commitments to green energy objectives, including the reduction of fossil fuels, following the COP26 climate change summit in Glasgow. It is important for those involved in socially responsible investment (SRI) to keep in mind that the actions in these indices are not examined for social or environmental problems and, therefore, no ETF that reflects these indices will not be examined. If you want your investment portfolio to participate in the green revolution, you can start by investing in renewable energy stocks.
A fund that scores well in the “environmental” category will likely avoid investing in companies with a large carbon footprint and may invest in multiple clean energy actions. That's why it's important to research the different ways of investing in renewable energy before making a decision. If you like to choose individual stocks, on your own or with the help of a financial advisor, you can invest directly in stocks of clean technology companies. Bonds are another way to invest in green energy. These bonds would allow people to invest in the rapid deployment of renewable energy and energy efficiency projects, with a fixed rate of return and with the full support of the United States government.
The reader of Times Money Mentor has obtained a return of 4.5% after deciding to invest ethically in solar parks in her innovative financial ISA. Meanwhile, if you want to invest the money you invest in a colder planet, right now you have several options available. Before investing in a project, make sure that the company you invest in is regulated by the Financial Conduct Authority (FCA). Since institutional investors and governments support “clean technology”, investing in renewable and efficient technologies can be a smart financial decision, as well as a necessity for a healthy planet.
