Understanding Green Investing

Green Investing is investing in companies, startups, or businesses that positively impact the environment. The companies that focus on solar energy, wind energy, hydro energy and other forms of sustainable energy are considered green investment companies.

Firms or businesses that focus on decreasing their carbon footprint or utilising natural resources are also believed to be green investments. 

Usually grouped with socially responsible investing (SRI) or environmental, social, and governance (ESG), green investments focus on companies dedicated to preserving natural resources, pollution decrease, or other environmentally-conscious business practices. Green investors look at the profitability of a potential investment with its effect on the environment.

Many people think that to invest in companies that are good for the planet, they have to give up their investment returns, but that is not the case. If one does the research and choose a good stock or fund, it can give great returns even if it is environmentally conscious.

How to become a Green Investor?

You can invest in green mutual funds, green index funds, green ETFs, green bonds, or purchasing stock in green companies. When investing in a green fund, it is vital to do your research and know its exact criteria to invest. Everyone has a slightly different opinion about what qualifies as a green investment. So, we suggest you research and make sure the funds’ philosophy aligns with your plans for the future.

Types of Green Investing

There are many ways to invest in green funds. While some are considered a risk, some green investments can return good profits. Let’s have a look at them:

1. Green Equities
The simplest way to do green investing is to purchase equities or stocks in green companies with strong environmental commitments. Many startups are developing different energies and materials and aiming for a low-carbon future.

2. Green Bonds

You can also invest in green bonds or climate bonds. These bonds represent loans to support banks, companies, and government bodies with a positive impact on the environment.

3. Green Funds

Then there is a mutual fund or ETF that provides more significant exposure to green companies. These funds invest in a group of promising securities, allowing investors to diversify their money on environmental projects instead of a single stock or bond.

So Should I become a Green Investor?

Yes, you definitely should invest in Green funds and become a green investor. Because having a green fund in your portfolio can be a good idea. You are not just helping the environment; you are also diversifying your portfolio. However, for now, it is best to avoid having your entire portfolio centred only towards green investing, as that could limit your options. So, try to keep your portfolio diversified and invest in different funds or stocks.

Happy Investing!!