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Solar Energy ETF Investment: Pros and Cons
Investing in a solar energy ETF can be a good investment for many, but these do have both advantages and disadvantages that potential investors should understand. First of all, what is a solar energy ETF? Almost every one understands that solar energy is an alternative energy source that is clean, sustainable, renewable, and does not use fossil fuels or have harmful carbon emissions. ETFs are short for exchange traded funds, and these investment vehicles are a combination investment. ETFs are a cross between a mutual fund and shares of common stock. These instruments can be traded through the day, and they are a portfolio of different securities. Exchange traded funds are listed on a recognized stock exchange, and ETFs have the ability to trade to the total asset value that the fund holds. These investments are managed by a professional financial advisor or money manager.
Solar energy technology and residential solar power systems have become more widespread and popular. This has caused an increase in the purchase and price of solar energy stocks and solar energy ETFs. Solar energy has great potential, and investing in this alternative renewable energy source can make good financial sense. The new administration and president have made it clear to the world that alternative energy sources including solar power technology are going to be a priority in the next four years. This means an investment in solar energy stocks and solar energy ETFs have more return potential when this energy source becomes more commonly used.
Some pros of solar energy ETF investment include the environmental aspect. Solar energy is clean and does not pollute the atmosphere or contribute to global warming, making it an extremely clean source of alternative energy. Solar energy has not taken off like wind energy has yet because solar energy is more expensive, but there are already tens of thousands of residential solar power systems in use across America, many in the west where longer days and brighter sun make solar power more suitable. Solar energy technology has advanced to the point where this alternative energy source is much more cost efficient, and the sector is starting to take off. Investing in solar energy stocks and solar energy ETFs can provide you with a much better return, while doing your part to eliminate pollution, greenhouse gas emissions, and global warming. ETFs in solar energy help minimize the risks associated with individual solar energy stocks, because the risks are spread much wider. These funds are like mutual funds with greater flexibility. Solar energy EFTs may also have tax advantages which mutual funds do not.
Solar energy ETF investments can have some cons as well. These hybrid investments usually incur brokerage fees or commissions on each trade or purchase, and this can lower the returns you see on the investment. Embedded fees may also be hidden into the contracts or paperwork, and you may not be aware of these fees until they are deducted. You can minimize these risks when investing in solar energy ETFs. Make sure you read any paper or contract very carefully, including any fine print, so that you are aware of any fees and commissions charged. The investment into solar energy exchange traded funds can also involve trading at a premium or discount, which means trading prices may happen either above or below portfolio asset value.
Solar energy ETFs offer an opportunity for some investors, but these are not for everyone. Weigh the pros and cons carefully, to ensure you understand the technology used, the terms and conditions, and all other factors. These fund investments can offer you many advantages for investing in solar energy without the high risks involved in solar energy stocks, but there are some disadvantages you should know as well.
The information supplied in this article is not to be considered as medical advice and is for educational purposes only.
|Alternative Energy ETF16 Feb 2009|