You’re probably sold on the idea of going green. You may even have solar panels on your house. But have you ever thought about investing in green energy? The green energy sector has seen a boon recently. Not only that, but green energy is predicted to grow rapidly over the next 20 years. This has been helped along by a tumble in the costs of solar and wind power. This fall in cost has been largely due to better infrastructure, as well as higher voltage cables.
Green Energy Investment
Couple this with the fact that there has been a downswing in the gas and oil industry. And also the use of coal is predicted to shrink overall. More people are turning to green energy for their everyday living, like offshore wind energy. Electricity from non-fossil (renewable) fuel sources is certainly growing in popularity. Solar remains a commercially viable technology. Fossil fuels are on the way out, in more ways than one. They are non-renewable sources which will eventually be depleted.
This combination of dropping green energy prices, and a rising demand for these alternative energy sources signals a new dawn, which could present investment opportunities. So how do you get in on the green investment game? There are different ways of investing in renewable energy.
The ﬁrst thing to remember is there is some risk involved. It’s a relatively new sector, in its early stages. Although the outlook is bright, it’s impossible to predict with any real certainty, which green energy investment will perform well. If you’re unsure, professional ﬁnancial advisors can help. If you’re keen to go green with your investments, a good approach would be to spread your risk through diversiﬁcation. You can do this through a mutual fund.
There are funds investing in renewable energy companies. This way, you pick a combination of companies and investment types to better protect your savings. A professional fund manager should be able to help you choose a broad range of stocks. They’ll invest on your behalf and help you pool your resources with other investors, spreading the collective risk.
Another way of going green with your investments is through ETFs. Exchange Traded Funds Allow you to track an index. In this case – the green energy sector as a whole. You could also take a position on the green energy sector as a contract for difference trade.
So with these, your investment mirrors the performance of the sector. The value of your ETF would rise and fall in line with the green energy market. These really are an exciting way of going green, as they can give you exposure to some of the world’s largest green companies. Plenty of ﬁnance brokers provide online services to assist in these kinds of investments. CMC Markets is one such platform you could look into.
You also have the option to invest directly in shares in green energy companies. This is a riskier angle, because your returns will depend on the the performance of an individual company. So if you did opt for this route, you’d need to do some extensive company research.