Are you thinking of investing in green stocks and technologies? Consider a few key issues before you put your money on green.
First, make sure that you cover all of the other due diligence for investing in stocks. Just because you can feel good about making a difference in the world doesn’t mean that it is wise to do so without looking at the bottom line of the companies or funds that you are investing in.
Secondly, keep in mind the volatility of the market in green stocks. In the plummet of stocks last year green stocks took a beating of 50-80%, whereas the overall market fell 34%. While green stocks have begun to rebound faster, it is still a real and potentially greater risk for going green.
Additionally, a changing regulatory environment makes it harder to gauge the potential returns for green energy such as solar power alternative energy, etc. With cap and trade likely to show up on the near horizon that may change the playing field greatly, as well as potential credits for green jobs and the like.
Lastly, remember that “green” is a gray area. The regulatory structure around what is defined as “green” isn’t well established. This means that companies that may label themselves as green may very well not have much to back up that claim.
Good Luck Going Green!
Miel
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DINKS (Dual Income No Kids) Finance is a blog discussing personal finance for couples. While by no means financial experts, we own a variety of assets including real estate and stocks. We've been up to our eyeballs in debt and have made tons of financial mistakes. However, we've successfully retired that debt and we both do learn from our failings. We hope that our voice in this blog can help others in achieving their goals!
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