Investing In The Stock Market

Investing has always been a bit tricky for those with strong opinions and consciences.  Sure, you want a good return on your money like everyone else, but you’d rather not hand your money over to a company that makes its money by flattening baby seals with a gas guzzling CO2 machine in the rain forest (or something like that).  You would prefer that your hard earned dollars go to companies that are making the work a better place.  If this sounds like you, green mutual funds might be for you.

As their name suggests, green mutual funds are mutual funds that hold stocks from so called “green” companies.  Green companies are those which work in environmentally friendly industries.  An example of a green company would be a company that produces wind power equipment.  These companies are picked by the fund manager, so it’s his definition of “green” that determines what stocks can get in or not.

Of course,  these funds are also intended to make money.  The fund manager does his best to select the best earning stocks, just as with a normal mutual fund.  However, in the case of the green fund, the manager is limited to companies that follow the proper ethical guidelines.  As you can imagine, having  a limited pool of stocks to choose from does affect potential performance.

Additionally, since many green companies are in start up fields such as renewable energy, these green funds are often much more volatile than a normal mutual fund.  The ups can be greater, but so can the downs.  It’s something you should definitely think about before pulling the trigger on a green fund.

So, are green mutual funds for you?  It really depends on the person.  For some people, the risks and volatility associated with green mutual funds isn’t worth the “feel good” aspects of owning them.  For others, the feeling of investing in companies that are doing the right thing for the environment outweighs the potential downsides in terms in investment returns.  In the end, it is your decision.