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How do I Invest in Alternative Energy Stock?

Article Details
  • Written By: Geri Terzo
  • Edited By: C. Wilborn
  • Last Modified Date: 14 October 2018
  • Copyright Protected:
    2003-2018
    Conjecture Corporation
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Investing in an alternative energy stock can be rewarding in a number of ways. The right investment will not only result in profits, but also contribute to socially responsible investing. To invest in alternative energy stocks, you must find a stockbroker to facilitate buy and sell orders with a stock exchange. Then you must narrow down your choices and decide which form of renewable energy industries, such as solar or ethanol companies, you would like to pursue. Some brokers have specific expertise in alternative energy investments, and may be able to provide advice.

The first step to investing in an alternative energy stock is finding a broker. Investors may select an online broker to facilitate trade orders, and may research and compare options on the Internet. Brokers typically charge a flat commission for executing a certain number of trades, and may also require a minimum investment. Once an online account is created, investors can initiate buy and sell orders on stocks at will.

The other alternative is to visit a traditional brick and mortar stockbroker office. By choosing this option, you may better be able to tap into the financial expertise of the broker and receive some investment advice on the renewable energy sector. Many large brokers conduct much of their business online, so finding a physical office may be challenging in smaller cities.

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In order to find the appropriate alternative energy stock, you should perform some due diligence and research potential investments relative to your tolerance for risk. For instance, new advancements in technology are expected to make solar power a more attractive economic alternative in the future. Some solar companies depend on future technological developments to drive future profits in solar panels and other products. Therefore, although solar holds much promise, investors may have to be patient and willing to invest for the long term before reaping profits in some cases.

Investing in any company carries with it some risk, and an alternative energy stock is no exception. Since solar is in many ways still being developed, there is additional risk. There is also a possibility for generous rewards, however, as technological advancements bring solar more towards the mainstream. This is where you must decide your risk/reward profile, so that you can determine how much money you can afford to lose and the time frame in which you hope to achieve returns.

There is also a segment within alternative energy investments tied to ethanol-based fuel. These companies produce alternatives to traditional fossil fuels used for transportation, including oil and gas, which distribute harmful pollutants into the environment. Many automobiles and trucks around the world are being manufactured to accept ethanol-based fuel, which positions the ethanol industry and investors for future profits.

Ethanol producers rely on corn or sugar to produce the fuel alternative. When the price of corn or sugar rises, it makes the proposition for producing these alternative fuels more expensive. This scenario can hurt future profits at a company, which will impact an alternative energy stock. Most renewable energy investments are more economically viable options when oil and gas prices are rising. This can lead to volatility in renewable energy stock performance that investors should be aware of.

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