ALTERNATIVE
ENERGY
Alternative Energy as an Investment
Renewable energy sources include solar, wind, geothermal, hydroelectric, bioenergy and ocean energy. In 2010, approximately 200 gigawatts of energy were generated worldwide. By 2025, that number is expected to reach 10,000 gigawatts, and projections put global renewable energy production at nearly 100,000 gigawatts ten years later. Currently, the world’s population requires about 25 million gigawatts.​
Every time I see the lights of the city shining, I hear the cash register ringing
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​Countries with a particularly high rate of energy production from renewable sources include Iceland, Nepal, Haiti, Congo, Somalia, Ethiopia, Tanzania and Zambia. In the meantime, however, countries such as China, Japan, the USA and Germany have also caught up strongly. As an investor, this broad asset class offers not only good diversification but also a sense of well being, doing something meaningful and sustainable for our planet.
ANNUAL ROI
INVESTMENT PERIOD
INVESTOR GROUP
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UP TO ANNUAL R.O.I.
Disadvantages of
Alternative Energy
COST FACTOR
POLITICAL INSECURITY
WEATHER DEPENDENT
THE RIGHT LOCATION
STORAGE OF ENERGY
Unfortunately, the production of “green energy” is still very expensive comparing to other energy, which is why this type of energy is often subsidized by the state. In addition, this energy production is associated with high costs for installation and maintenance. These costs are slowly but steadily decreasing and will soon no longer have to be listed as disadvantages.
Depending on the political orientation in a country, a change in the laws for renewable energies can have strong effects. If the costs of a solar installation have to be paid by the customer, so the subsidy is removed or the taxes on energy are increased, as can be observed in Germany at present, disadvantages arise again. At the same time, energy from renewable sources is more expensive than nuclear energy. As soon as this disadvantage has been eliminated, an investment in renewable energy sources makes double sense.
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Advantages of
Real Estate & Plots
EASIER TO UNDERSTAND
UPVALUABLE
A HEADGE AGAINST INFLATION
PROPERTIES EXIST IN AN INEFFICIENT MARKET
CAN BE FINANCED AND LEVERAGED
INFLATION IS AN ADVANTAGE
Real estate is easier to understand at first than other investment classes. With most investment opportunities, it can be difficult at first to grasp everything you need to know in order to make a profit. Many types of investments rely on abstract concepts and complex algorithms that can be particularly difficult to understand. Real estate, on the other hand, involves the purchase of physical property and most people are familiar with real estate to some degree. Investing in real estate can be much easier to understand than complex investments developed by mathematicians.
After buying a share, you hold it for a certain time and hopefully sell it at a profit. The success of the share depends on the company management and its corporate success, which is outside one’s own control. In contrast, real estate investments are directly under one’s control. Although you can’t control demographic and economic changes or acts of God, you can control many things related to the physical property and tenants. With good management of the entire real estate portfolio, the value of your investment can be noticeably improved and wealth can be built.
Real estate is one of the few investments that respond proportionally to inflation. When inflation rises, property values rise and rents rise. Although real estate is generally a good hedge against inflation, rental properties that are re-rented each year are particularly effective because monthly rents can be adjusted upward during periods of inflation. For this reason alone, real estate is one of the best ways to hedge an investment portfolio against inflation.
Unlike the stock market, the real estate market is full of inefficiencies. There is a lack of transparency in terms of individual property values and also the strength of the various markets, which means that real estate investing has the potential for very high profits. Real estate investors who do their research, especially with the help of industry experts, can find great real estate bargains.
Technically, of course, you can buy stocks and other assets using debt, but that can be very risky because the financing is not buying a hard asset. Real estate, on the other hand, is a market where products are usually purchased with debt. Real estate investments purchased with hard money or a mortgage can be structured in a way that is fairly safe and affordable, so large purchases can be made with a relatively small initial investment. The result is the purchase of a hard asset that increases in value from year to year, and the payment for it is made primarily with other people’s money or banks.
If a property is purchased, this is usually done in conjunction with loans. Of course, I have to pay attention to the conditions of the bank. A good and trust-based relationship with the banker can quickly bring a significant advantage here. In addition, the time of depreciation plays into one’s own pocket. Especially with real estate, the cost of credit is often cheaper than the profit I have through regular inflation. Example: If inflation stands at 3% and I get my loan with 1.5% interest, I already have every year on average a profit of 1.5%.
A personal note
We hope we have not dampened your spirits. Of course, you just found a lot of risks. Nevertheless, if the necessary capital, a little time and self-discipline is available, real estate can be a fantastic way to secure the capital and let it grow. If you are ready, to leave your comfort zone a bit behind and look to different countries, maybe even outside of Europe, you will find more interesting possibilities.
The important thing is not to have to use all of your assets. Appropriate liquid assets are of high importance and must be partially available at short notice.
In addition, an investor does not have to start immediately with a large or risky project. The acquisition of land, warehouses or garages often offers an excellent entry into the real estate world. There are also possibilities to invest in Hotelrooms, small studios with all inclusive services in care and maintenance to invest. On top is the revenue on daily rent usually much higher.
To get an idea of which country or region currently promises the highest returns, it is advisable to take a look at magazines such as Forbes.
LINKS, PARTNER & PRODUCTS
In the following section, we would like to introduce partners, products and links to providers with whom we or trusted people have had good experiences and who offer sometimes unusual solutions.
PLEASE NOTE:
From some of the companies listed here we receive a commission. AF-Intermediary is not allowed to give investment advice. All actions are your personal responsibility.