The changing face of energy investment

Any investor will tell you that the key to success is looking to the future. Investing in a company or sector is all about assessing its value now, and trying to predict its value going forward. 

The energy sector, which is going through a radical period of transformation, is an area where savvy investors can make huge profits in a short period of time. However, doing this is absolutely reliant upon being very aware of the current state of the industry, and being able to accurately analyse the trends of tomorrow.

So, with that in mind, what should you be aware of when contemplating investing in the energy sector?

 

The growth of renewables

The move away from fossil fuels and towards renewables is a trend that is taking place the world over. This is, quite simply, inevitable; with fossil fuels such as oil and gas eventually going to run out, it is essential that alternatives are sought. And when it comes to the UK, it would appear that we are on the verge of a huge renewables boom.

According to research by GlobalData, the UK’s renewables capacity is expected to ‘at least double’ by 2030. With all of the country’s coal power stations – as well as all but one of its nuclear power stations – set to be closed by this period, such upcoming reliance on renewables makes sense.

And, with National Grid having announced recently that it is going to invest a whopping £58.9 million in renewables infrastructure over the next 12 months, it would seem that there is no slowing the renewables boom.

The end of nuclear?

Nuclear was once regarded as the future of energy, but it would appear that it is now falling out of favour, with renewables set to overtake it in terms of global output.

Currently, 10% of the planet’s energy supply is created via nuclear power, with 9% via renewables. However, a report recently released by BP suggests that renewables will overtake nuclear ‘in the very near future’. And, according to the experts who drafted the report, that overtake could even occur by the end of 2019.

 

6 common investment mistakes to avoid

Making investments can be a very exciting experience. Unfortunately, there are many mistakes that can be made when it comes to deciding what exactly you should invest in. Here we look at 6 common investments that you need to avoid to have a better chance of success.

 

Not knowing the industry

If you don’t know a business then how are you going to be able to accurately predict what their next move is going to be? If you’re interested in an investment opportunity but are a bit in the dark about the industry, make sure you do your research.

 

Heart over head

There could be an industry that you have a personal interest in or a company that you personally know or have an affinity to. You shouldn’t use these sorts of emotional questions to make your decisions, use your head instead of following your heart.

 

Not using your patience

There have been countless times when people have cashed out early only to find out that it was a terrible idea. Sometimes it can be tempting to snatch at an increase in share value rather than waiting to see how far it goes.

Not accepting the loss

On the opposite of patience, when people see the value fall they can often wait too long, desperate for it to get higher. You need to look at the reasons and make a solid judgment but sometimes it’s the best idea to accept a small loss and move on.

 

Not diversifying

If you’re an expert in one industry then you may be tempted to only invest in companies around that. The problem comes when there is an industry shift which can then affect all your investments. You want to spread them around to protect yourself.

 

Getting too emotional

It’s extremely difficult not to get emotional when it comes to your investments. If you’ve lost big then you always want to chase it and make everything right again. Instead, take time and analyze everything and don’t make any decisions in haste. It’s a simple step to take but one that at times can be easier said than done.

 

Too Good to Be True? 3 Warning Signs of an Investment Scam

There are plenty of legitimate investments out there, from stocks and bonds to mutual funds and rental real estate, but there are also lots of scams. These investment scams often sound great up front, but there is danger lurking in the shadows. 

It is all too easy to fall for an investment scam, and even sophisticated investors have been taken in. Whether it’s a business opportunity that seems too good to be true or the promise of outsized returns on a supposedly risk-free investment, these types of scams often follow a classic pattern – and make the same tired promises. Here are three classic warning signs of an investment scam.

The Promise of a Risk-Free Investment 

Every investment, from stocks and mutual funds to government bonds, carries some level of risk. Whether that risk involves rising interest rates or plunging profits, it is always there. The lure of a totally risk-free investment is a classic warning sign of a scam. 

Con artists understand how scary risk is, and they use that fact to their advantage. Whether they are touting a Ponzi scheme or looking for investors for a fake company, the bad guys know how to play the risk angle. Unfortunately, their promises of risk-free investing turn out to be anything but, and those who fall for the scam are left high and dry.

 

The Lure of Outsized Returns 

The lure of an outsized return on investment is another classic sign of an investment scam, and another reason to use extreme caution. Before you invest a single penny, you need to research prevailing market rates on fixed-income investments and historical averages for the stock market. 

If the person selling the investment is touting a return that is much higher than those averages, chances are it is a scam. This is doubly true if the seller guarantees those returns – nothing is guaranteed in the world of investment.

Assurances of High Short-Term Profits 

Over the years and decades, the stock market has amassed a strong track record. Over the short term, the swings have often been wild and downright frightening. Those basic facts illustrate the utter folly of promising high short-term profits. 

Scam artists know that investors are often looking for a sure thing and that they are drawn to the idea of guaranteed short-term profits. That is why they lure the unsuspecting with those promises, touting high short-term profits and using those promises to separate investors from their hard-earned money.

If the person touting the investment makes any of the above promises, it is time to grab your chequebook and head the other way. These scams are more common than ever before, and it is important to protect yourself and your money from the bad guys. Knowing what to look for is half the battle, and the sooner you learn them the better off you will be.

 

Is Bitcoin now a vital part of any fixed asset investment portfolio?

With new developments in the cryptocurrency space, namely Facebook’s recent announcement of its planned ‘Libra’ project for next year, it’s worth giving an updated overview of the ‘big daddy’ of cryptos: Bitcoin. Many have decided to pin Bitcoin’s recent rapid gains on such news, but the reality is that positive sentiment has been returning for most of 2019. Let’s take a look at why.

More simply, Bitcoin remains the exciting story of our times, threatening at any moment to rise up and steal much shine from gold as a fixed asset investment (there are only 21 million coins), or threaten financial stability with its added utility as an easy-to-use, reliable and cheap means of value transfer. Its vast, revolutionary and robust distributed blockchain technology powers transparent and largely traceable transactions, unstoppable and global. Its integration throughout the cryptocurrency space is deeper than ever, and the unique nature of its protocol, despite not being ideal in terms of energy-efficiency and scalability, proves highly secure. Development continues on its efficiency, including second-layer solutions and decentralised ‘dApps’ that reference its network. 

Amusingly, misunderstandings about the inherent value of Bitcoin continue to bluster about. We’ve had a ‘blockchain not bitcoin’ trend in 2018 until people realised that adoption and security are not easily acquired medals in the blockchain world, so now we’re seeing more of a ‘bitcoin not blockchain’ narrative again along with its price dominance in the space. The fact remains that both are ground-breaking, and here to stay. 

Is it still risky? There’s no doubt that many investors are smarting from the losses of 2018, but more likely this was another year of education and progress in the cycles of bitcoin ‘awareness’. As its price shot ‘to the moon’ in December 2017, many expected it to grow even further due to its combined attributes, but a barrage of regulation scare stories, exchange hacks and anti-hype sentiment (and misinformation) deflated the price action throughout 2018 whilst pouring new development (via ICOs) into the space. And all the while, the mining hash-rate of Bitcoin has been rising to new and extraordinary levels.

To conclude, there is much pointing to the likelihood that greater adoption of cryptocurrency is coming thanks to other blockchains rising, developing dApps and exciting, monetized social media features, collectibles and games. Financial institutions and regulators have more threats, targets and headaches than ever. And as greater adoption comes, the labels of ‘risky asset’ and volatility concerns will start to diminish. 

Of course, there will no doubt be huge surges and pull-backs still to come but with Bitcoin the mentality of ‘no pain, no gain’ has never been more apt, since it is much more than just money.