With so many people now embracing the green movement by recycling, using solar energy, and driving electric cars is it also time to consider green investment funds for your money?
If you want to be socially responsible with your investments, aside from investing directly with the companies producing ecological products you now can choose from several mutual funds and ETFs modeled on ecology and environmental principles. These funds invest in companies that range from alternative energy companies to clean water and even companies who simply find ways to reduce the carbon footprint of mankind.
With a clear direction to environmental friendliness and the support of green industries from both the public and governments, some analysts believe that now is the perfect time to get involved with green investment funds. This is true in both Europe and the U.S. and even some Asian nations are beginning to follow a doctrine of green industry.
Those who are considering such an investment strategy need to understand that the sector is still relatively new and can be subject to volatility. A good example of this is the struggle solar energy producers have faced as well as the bankruptcies of biofuel producers. You should also realize that green investment funds are not a way to provide a direct benefit to the earth’s environment.
Some people believe that buying stock in one of the non-eco companies such as oil or automobile producers is akin to handing money over to these companies to promote their agenda’s, but this isn’t true. When trading stocks and funds you are more than likely just trading shares with other investors and the money does not benefit the underlying company in any way. Plus, your small investment is hardly enough to make a difference in a market that sees hundreds of millions of shares traded on a daily basis.
Instead, you can think of green investing as a way to reflect your own values, rather than providing a direct benefit to the environment. Like socially responsible investing, it sends a message to markets, but doesn’t have a deep impact on the actual performance of the underlying companies.
There are a wide range of strategies when it comes to green investment funds. Some tend to be very diversified within ecological companies, while others focus on specific sectors such as solar energy, clean water, or clean power generation. The more diversified funds do tend to be less volatile over time and may be more suited to conservative investors. Liquidity can also be a problem with more specific funds as they tend to be on the smaller side, though the ETFs tend to be much larger and easier to trade.
In any case, it is nice to know that you can benefit the environment, no matter how indirectly, and still make money by focusing on green investment funds. They may not change the world, but they are a step on the right direction.