Investing green with a piece of your retirement, business assets, or general investment portfolio not only sends an important message, but has a long term ability to profit as the world goes greener.  Hardcore DIYers may want to take more risk by investing in individual stocks, but I would not recommend it.  If you’re interested in it anyway, here's a good place to start.  I recommend spreading your risk amongst a combination of ETFs (exchange traded funds) and mutual funds, and it’s always best to understand your time horizon and not look at your investments every day.  Green energy in particular can be volatile, so don’t be scared when the markets are choppy.

So the questions is: where to start?  Well, shameless self promotion has never come so easy - you can start at my blog, Smugly Green, for some basic information.  But here are some steps you can take to invest greener or more responsibly:

1.) If you don't do it yourself, get a financial adviser.  Find someone local, someone you can trust, and always understand that there is a conflict of interest when someone is paid on commission.  If you're a DIYer, I recommend online brokerages like AmeriTrade, optionsXpress, or eTrade - they tend to be cheaper than any brokerage house, and if you're comfortable managing your portfolio, they're definitely worth it.

2.) Allocate a % of your overall portfolio to green.  This is a personal choice - it is always good to have your risk spread among many different industries, many different countries, and many different asset types.  Green is just a part of the puzzle.  For me, it's the whole puzzle, but I'm willing to take that risk.  How much makes sense to you?  20%?  10%?  5%?  When you make the decision, understand that green has to be a long term investment, at least 5 year horizon, and probably longer.  Green can also be risky and volatile, like any stock.

3.) Start investing with the old guard of green.  There are some green funds that have been around for a long time, it makes sense to start with them.  They have long, proven track records, and more importantly, have shown a long term dedication to green investing.  Many funds are popping up on an almost weekly basis now as money floods green sectors, but avoid trying to make a quick buck.  Start with these:

New Alternatives Fund (NALFX)
Winslow Green Growth (WGGFX)
Domini Social Equity (DSEFX) - SRI investment

4.) Consider investing in the new green do gooders.  There are some new green/SRI investments worth looking at by respectable companies.  These track records are short, but I own some of them, and they are worth looking at:

Guiness Atkinson Alternative Energy Fund (GAAEX)
Winslow Green Solutions Fund (WGSLX)
Calvert Global Alternative Energy Fund (CGAEX)

ETFs are also an excellent way to "own the index" and expose yourself to green industry at a cheaper cost:

PowerShares WilderHill Clean Energy (PBW)
PowerShares Cleantech (PZD)
Claymore S&P Global Water (CGW)
Market Vectors Alternative Energy (GEX)

And for the very new, but very interesting funds and ETFs, check these out:

ELEMENTS Global Warming (GWO)
ELEMENTS Solar Energy (TAN)
SAM Sustainable Climate Fund (SMCNX)
SAM Sustainable Water Fund (SMWNX)

5.) Add income to the portfolio.  Green income is hard, if not almost impossible, to come by yet.  There are ways in the future it will be more viable (green real estate investments, green corporate bonds, etc.), but for now, it's a tough buy.  Instead, there are some excellent socially responsible investments that provide yields that you can feel better about:

Pax World High Yield (PAXHX)
Domini Social Bond Fund (DSBFX)

6.) Construct your portfolio.  This is the tricky part.  I recommend mixing four or five of the investments above that don't overlap very much.  For instance, investing in Water, Green Energy, Socially Responsible, Income, and Cleantech will avoid a lot of unnecessary overlapping.

7.) If you own a business, think about bonusing green stock or investing company assets in green.  Every little bit of green investing sends the message to Wall Street: be sustainable.

Matt Moscardi is the President and Founder of Smug Investments, LLC, the general partner of the Smug Green Global, LP hedge fund.  He is also a registered investment adviser offering green portfolio construction and consultation to individuals and institutions looking for exposure in publicly traded green investments.  For questions or contact information, see http://www.smuginvestments.com/, or read his blog at http://smuginvestments.blogspot.com/.



The official source of Green Investing is
the Environmentally Conscious Investing page at Business.com