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What are the Different Types of Alternative Energy Investing?

Ken Black
Ken Black

Alternative energy investing means investing money in alternative energy stocks, mutual funds, or products that produce energy from different sources. These sources are supposed to be environmentally friendly, often producing less greenhouse has emissions, pollutants, or both. Although not normally considered a comprehensive investment strategy in and of itself, it can be one of the tools used. The point of alternative energy investing is to realize a financial return, but also feel good about promoting sustainable energy practices.

One form of alternative energy investing deals with buying ownership into different types of alternative energy facilities. For example, during the ethanol boom of the early 2000s, ethanol plants were being built at the rate of 30 to 40 per year, though the number has fallen off from those highs due to capacity being near the maximum, and profit margins shrinking. Often, investors were invited to buy in to a plant being built. Still, for those who want to get involved in an ethanol plant, there still could be opportunities out there from time to time.

Man climbing a rope
Man climbing a rope

Alternative energy investing can also be done by seeking stock in those firms that profit in alternative energy. These companies may do this either by producing energy from alternative sources or by making the equipment that makes that production necessary. There are numerous Web sites that list alternative energy companies that are publicly traded. These companies, despite the fact that many are new and have little history, may be attractive for some investors. They are responsible for providing all the information any other publicly-traded company would be required to provide in order to give investors peace of mind.

Alternative energy mutual funds are also available for those interested in alternative energy investing. These funds, like other mutual funds, tend to try to strike a balance in companies, so that when certain companies are struggling, others may be thriving. The overall goal is to provide a comprehensive investment strategy that will help individuals realize a modest return on their investments, yet provide the capital for alternative energy companies to succeed.

Investors who are working through a broker or financial adviser should tell those individuals if they are interested in alternative energy investing. Some may not be comfortable recommending a comprehensive strategy in such an area. Therefore, it may be necessary to seek out a broker who focuses on these types of investments. There are investment banking firms, for example, that tend to focus almost solely on alternative energy investing. As with any investment, however, exclusively investing in one industry is a risky fiscal strategy. Therefore, each investor must determine what their goals are with the investment, and act accordingly.

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