Alternative Energy Mutual Funds - Are You Investing With Your Heart Or Your Head?



Alternative energy mutual funds are yet another way among the many ways of using and supporting renewable energy in our daily lives. As our site points out in a number of places, our earth is at risk from global warming and our excessive reliance on fossil fuels.

Thankfully, governments and individuals alike, have realized the need for change and so we are witnessing a remarkable world wide growth in renewable energy use through options such as wind, solar and biomass.

Perhaps less well known, is the movement towards investing in alternative energy mutual funds. The renewable energy movement secures funding through a combination of government incentives and private investments. It is in this private investment arena where we can all help.

Investing In Alternative Energy Mutual Funds

Firstly, let's define what they are...

They are clean energy funds where the funds are invested in companies involved in renewable energy, energy efficiency, alternative fuel vehicles, and companies that are part of the supply chain for any of those sectors.

For example, investments may be not only in wind, solar, biomass, geothermal, hydro-power and alternate fuels but also in waste management and recycling and general energy conservation activities.

These alternative energy mutual funds are managed by professional fund managers and they invest in a range of stock to give you returns at different levels, depending on your risk profile. These type of funds are great for those people, probably the majority, who have neither the time nor the skills and experience to choose individual green funds in which to invest.

Therefore it becomes a matter of personal choice. If you want to ensure that your money is invested in such a way as to help finance renewable energies, then these mutual funds are the way to go.

Investing with the head and not the heart

This age-old maxim applies to all investing, but it has particular significance when it comes to renewable energies. It is very easy to become passionately involved in alternative energy projects and activities and this can unduly sway you into making a bad decision. Just because a fund is a green energy fund doesn't automatically make it a wise investment.

So, you need to do your homework.

So here are useful tips to follow...

  • - there are quite an array of costs that can differ from fund to fund. A broker can be useful to find the best deals, as long as you don't let that be your main reason for investing.
  • Get professional advice - and make sure that your broker or adviser isn't on a commission.
  • Invest for the long term - as a general rule short term investing is not profitable.
  • Know your own risk profile - investment funds will offer you a range of choices, some of which entail a higher degree of risk than others. You need to be comfortable with how much risk you are taking.
There's no doubt that alternative energy mutual funds need to be supported by the general public but remember the golden rule invest with your head and not your heart.

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