How to Invest in Green Companies
These days many investors are looking for ways to incorporate their concern for the environment into their investing. With renewed interest in alternatives to fossil fuel, the green energy arena seems poised for growth. According to Jennifer Schonberger on the Motley Fool website, the fact that alternative energy sources like wind and solar are still in their early stages provides the potential for excellent growth. Investing in those up and coming green companies can get you in on the ground floor of the next energy wave.
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Instructions
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Green Stocks
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Check the environmental records of companies you admire, or companies whose products you use every day. Organizations like the Sierra Club and the Environmental Defense Fund rank companies according to a number of green criteria, including sustainable manufacturing processes, green energy usage and the use of recycled materials to manufacture their products.
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Open a brokerage account if you do not already have one. Online brokerage firms provide low commissions for those who are comfortable making their own investment decisions.
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Log on to your brokerage account and use the stock screening tools to find companies in the green energy arena and other environmental niches. Make a list of those stocks for further research. Doing your due diligence on a stock is essential--this includes checking the earnings growth of the stock, comparing the 52-week high and low to gauge volatility, and examining the strength of the contracts the company holds with private industry and government agencies.
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Choose the stocks you wish to invest in, then go to the trading menu on your brokerage account. Enter the ticker symbols for the stocks, along with the number of shares you wish to purchase. Click on the "Verify" button to review your order, then click "Submit" to send the order for processing.
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Print out a copy of your confirmation and keep it with your tax records. You will need proof of the price you paid for the stock to calculate your capital gain when you sell.
Green Mutual Funds
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Contact several low cost mutual fund families and request prospectuses for their green energy and environmentally conscious funds. Large fund families like TIAA-CREF, Charles Schwab and Vanguard all provide several such funds for green investors.
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Review the prospectuses carefully and compare the performance of the fund against others in its field, and against the stock market as a whole. Look for funds that consistently meet or exceed the market averages.
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Complete the application for your chosen fund, and mail it, along with your check, to the address shown on the form. Be sure to use the right mailing address--some fund families use a separate address just for overnight mail.
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References
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