Diversification can come from a number of different factors. Here are five examples.
1) Diversify your investments across a range of sectors
Many positive investment providers look to enable their customers to invest in a broad range of sectors. At Ethex investors can choose to invest in a number of products sourced from a diverse range of sectors, including renewable energy, affordable housing, sustainable agriculture, sustainable transport and social care
2) Consider also the potential to diversify your investments within sectors too
In order to further spread your risk, within certain sectors such as renewables you can also diversify by different types of renewable technologies including; wind, solar, tidal and hydro power generation.
3) Think carefully about the time you want to tie up your money for. How accessible or ‘liquid’ do you need all or part of your investments to be
Considering how long you can afford to tie up your money for is an important factor for all investments and savings. Some of the products on Ethex are redeemable after a year meaning your money is readily accessible should you need it whereas others may require investment up to 20 years (and beyond should you choose to keep your money invested). While some will offer a mechanism to sell your shares or bonds via our secondary market, others may be looking for long-term investors.
4) Take into consideration the type and level of return you’d like to achieve
Investors’ objectives including the level of financial return versus social return will vary from person to person.
At Ethex we clearly display the projected financial return that could be generated from the offers as well as the social impact however, these returns are never guaranteed and depend on the continuing success of projects.
Certain products types such as bonds and shares can also typically pay a return to investors on an annual basis. Other types of product such as depository receipts forecast to pay a return and will allow you to reinvest this to further grow your money.
It’s also a good idea to do your research and take a close look at the track record of organisations you’re looking to invest in.
5) Think carefully about what type of products you’d like to invest in
There are a growing number of positive investment and savings products. These can be categorised broadly as follows: shares (equity investments), bonds, funds, savings, stocks and shares ISAs and cash ISAs. Diversification across a range of product types also can also help investors to spread risk.