Investing in alternative energy has become a hot topic in the last few years. As environmental issues become more and more prevalent, the interest in alternative energy has grown. When researching potential investments you may find that investing in alternative energy is right for you.
After all, with one investment you can feel good that you are supporting clean energy and being environmentally conscientious, while also investing in a growth industry.
There is little doubt that alternative energy is the future, and these are just the earliest phases of what will undoubtedly be the next flourishing industry. The environmental impact of oil, combined with soaring costs have made for the perfect environment for alternative energy.
Alternative energy will only continue to grow moving forward, as clean energy systems become more feasible due to an increase in technological advances. As the number of publicly traded alternative energy companies rises, you may be interested in how to invest in alternative energy.
The Wave Of The Future
With the growth of the alternative energy industry, investors have been anxious to get in on the next hot company. Be cautious of the hype that can surround these types of investments, as the corporations with substance can be difficult to spot.
Investors should use caution when choosing individual alternative energy stocks as the technology can be complex and challenging to understand. Individual alternative energy stock are also prone to extreme volatility, and therefore, not suitable for every investor.
How To Invest In Alternative Energy With Green ETFs
The solar sector has been the driving force behind the boom in Green ETFs, as many have enjoyed gains of 20% or more. Through a selection of companies that focus on renewable sources of energy and clean energy technology, Green ETFs are set up to provide an environmentally friendly boost to your portfolio.
While Green ETFs are cost effective, and less risky than picking individual alternative energy stocks, the downside is that the holdings in these funds are US based, and offer little in the way of international exposure.
When researching possible investment opportunities, keep your focus on established companies which were early movers into the clean energy sector. This avenue may result in less impressive profits, but may also provide some insurance against a massive bust.
Mutual Funds For Alternative Energy Investors
There has been a lack of mutual funds available for investors looking to get into alternative energy investments. The recent growth in the industry, however, has produced several new offerings, with more on the horizon.
With the complex nature of alternative energy technology, and the minimal coverage of these companies by analysts, there is still room for active management in this sector.
The downside for these funds is that the expense ratios can be high, with some upwards of 1.5%. In light of these expense ratios, Green ETFs are the most cost-effective way to diversify into this sector.
Always carefully research all alternative energy investments before committing any capital to make sure they fit into your investment objectives.