A Beginner’s Guide to Green Investing
By Jack Shaw
You’ve likely heard the advice to vote with your money. The most straightforward way to support the sustainability movement is to use biodegradable or reusable products, which prompts businesses to incorporate green practices into their production lines and supply chains. It also means finding an alternative for non-eco-friendly items in the market.
Another way to promote sustainability with your cash is through green investing. Here’s what you need to know about this practice and how to make the most of it.
What Is Green Investing?
Green investing refers to allocating money to products, startups, initiatives, and other opportunities that benefit the environment. Sustainable endeavors include organic farms and eco-friendly e-commerce. Buying from these establishments aids in their longevity.
Meanwhile, sustainable investing offers an opportunity to support their products or services. You can boost their capital to expand locations, market their offerings, and more.
Green investing is also a win-win situation for your moral compass and wallet. The more a sustainable company you invest in grows, the higher payouts you’re likely to receive in return. You’re indirectly investing in the planet’s safety while profiting from it. It can also diversify your portfolio and provide other investment opportunities.
The Call for Green Investing
Green investing is akin to saving the world. While it may sound like an exaggeration, more than $4 trillion a year in investment is needed over the next 30 years to meet net-zero goals. Many companies have made environmental promises to reduce their footprint, but society must determine how to eliminate emissions.
Suggestions include creating a new energy system and focusing on waste reduction technologies. Investing is a step toward bringing those ideas to life and making the Earth a more habitable space.
What to Be Careful of in Green Investing
Green investing has its downsides. The main thing to watch out for is companies greenwashing themselves. Making products and services seem environmentally sound even when they aren’t can fool customers and investors.
For instance, JP Morgan, Citibank, and Bank of America preached green investment opportunities to the public. Meanwhile, they and several other establishments lent money to industries contributing to global warming.
General investing concerns such as late payouts and company failures should also be on your mind. Instead of a sinking ship, put your money into a more valuable account with a strong and sustainable mission.
Getting Started on Green Investing
Green investing funds can come from various origins, including personal income. Inheritance can also be a great way to have a large sum of money readily available. The average time of distributing an estate is 17 months, but it may be shorter or longer depending on the circumstances.
Once you’ve raised the funds, it’s time to research green investment options. There are several niches to explore, from transportation to energy to buildings. Make sure the company’s environmental mission aligns with yours. It’s also worth investigating their financial soundness.
With your newfound knowledge, purchase environmentally friendly stocks and mutual funds. Contemplate whether you want to prioritize risk or reward with your investments. You can buy shares from multiple companies or go all-in on one establishment.
Best Green Investments
There are numerous green investment opportunities with various environmental interests and priorities. Here are some top options.
1. Electric Vehicles
Electric vehicles garner plenty of interest in the auto industry. They’re known to create zero emissions to ease climate change. Hybrid cars are also worth looking into since they’re a flexible option that customers seek to cut down on their carbon footprint.
What makes EVs so attractive is how good of a deal they are. A Tesla or Toyota may qualify for a $7,500 tax credit if you bought and drove it primarily in the U.S. There are also more affordable vehicles like plug-ins and battery-based automobiles.
2. Renewable Energy
Renewable energy is also a booming industry. Residential and commercial properties seek the energy and cost-efficiency these alternative power sources provide. You can build profit from entertaining such demand.
Several options are available, including companies focused on solar, wind, and geothermal power.
3. Agriculture
As the world population grows, there is a higher demand for food. You can invest in a farm or livestock facility that focuses on sustainable practices, such as organic insect repellent and biodegradable containers. Seek establishments that feature good animal management practices, like keeping animals well-fed and cage-free.
4. Plant-Based Food
Plant-based food is gaining more traction as an alternative to meat. Veganism and vegetarianism are catching on with sustainable consumers. The global market is projected to expand from $11.3 billion in 2023 to $35.9 billion in 2033, boasting a CAGR of 12.2%.
5. Waste Management
Waste management is an essential facet of sustainability. You can invest money in recycling centers that reprocess paper, metal, and glass into different products. Technology development and cleanup initiatives also focus on removing waste from landfills, oceans, and other areas. While there may be less profit, it’s good for your conscience.
Try Green Investing
Green investing is becoming popular as people strive to become environmental stewards. Explore the numerous opportunities to improve your sustainability efforts and increase your earnings. In one sweep, you can boost the planet and your portfolio.
Jack Shaw is the senior editor of the men’s lifestyle magazine Modded and has written extensively about electric vehicles, sustainable practices, and maintaining a green lifestyle through your everyday actions. His writing can be found in Green Living Journal, Packaging Digest, EcoHotels, and more. Connect with him via his LinkedIn.