Investing in Coal – Tips for Investing in Alternative Energy
As prices of oil and gas keep rising, businesses and governments alike are looking for cheaper, more efficient forms of energy. This can be interesting to investors who want to take part in the alternative energies market. One form of alternative energy that is receiving more attention from the financial industry lately is coal. The use of coal as a form of energy is nothing new, but in today’s world, investing in coal can be a good idea because it is considered to be a cleaner form of energy than other alternatives. This is due to the passing of the Waxman-Markley Energy Bill, which rewards businesses and governments for using clean sources of energy, such as coal.
The financial incentive that is derived from this bill will keep the demand for coal high, because more and more countries are going to be looking for new forms of sustainable energy. Another reason why investing in coal is considered to be a sound opportunity is that historically, much like gold, it is seen as a stable commodity. Investors are usually encouraged to include some stable commodities in their portfolio as well as more risky propositions, for a balanced financial outlook that will make them money at a slow and steady rate.
The demand for coal is growing all over the world, including large countries such as China and India. By investing in coal, you are investing your money in an international product which will be able to withstand the changing markets of your home country. It’s better in unstable economic times to look at international stable properties, such as coal and gold. A coal ETF can be used as a way to hedge foreign risk. It is also a good way to gain some beginning exposure to the alternative energy market, before investing in new and risky businesses.
The disadvantages to investing in coal are the same as in any other investment, in that there isn’t any investment that comes completely without risk. Yet if you pay attention to the market and are able to conduct research to see where coal is thriving and what predictions are being made, you can ride the highs and lows of the market with a fairly stable portfolio. It can be helpful to watch some major coal ETFs with the help of investment professionals before you buy into any of them, so that you can gain a greater understanding of market conditions.