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How to create a green retirement portfolio with self-directed IRA

Green investment has become popular in recent years. Here’s how you can help protect the environment while building your retirement income.

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Green investment is becoming the next big thing for modern investors, who prefer to do whatever they can to help protect the environment while building their retirement income. Some examples of “green” investments include renewable energy, waste management, transportation, manufacturing, agriculture, advanced materials and clean technology.

Green investment is becoming the next big thing for modern investors, who prefer to do whatever they can to help protect the environment while building their retirement income. Some examples of “green” investments include renewable energy, waste management, transportation, manufacturing, agriculture, advanced materials and clean technology.

A conventional IRA may not allow you to invest retirement funds in eco-friendly investment opportunities and alternative assets, but a self-directed IRA does. You still enjoy tax-deferred growth and income, but self-directed IRA accounts allow you to select exactly which types of investments are funded with your retirement savings.

Why is green investment becoming so popular for retirement portfolio?

A large part of today’s workforce is composed of Millennials, who tend to be more aware of – and passionate about – environmental issues, sustainable living and business responsibility. This environmentally conscious attitude reflects in their investment decisions and style as well, leading them to choose green investments over traditional options.

Investing in green assets with a self-directed IRA

Here are six types of investments that will help you go green with your IRA investing strategy:

1. Energy-efficient real estate

Look for commercial or residential structures with a low carbon footprint. These could be buildings powered with green energy, built with sustainable materials, or designed to reduce water consumption, heating and cooling costs, etc. Energy efficiency upgrades or redesigning projects can help boost the value of your existing IRA real estate as well.

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2. Green energy projects

Growing climate change concerns make renewable energy projects the ideal investment options for green investors. Consider biofuel, solar, offshore wind and water energy investments, as well as clean technologies for oil, gas and other natural resources. You could also make IRA investments in private capital for companies with good environmental practices.

3. Clean transportation options

In developing markets as well as developed ones, the demand for greener transportation is on the rise. Investing in clean-emission public buses, light-rail vehicles, hybrid or electric vehicles, ride-share cars and even companies building carpooling or ride-sharing apps is a good way to promote clean transportation and diversify your retirement portfolio at the same time.

green investment

Consider investing in clean commodities that will help save energy or resources. (Source)

4. Green infrastructure investments

Green bonds are a common investment vehicle used by cities and states for funding infrastructure upgrades, such as clean water, wastewater, waste and bioenergy systems, safer and more energy efficient public transportation, etc. Since they are backed by the local, state or federal government issuing them, green bonds are usually both tax-exempt and secure.

5. Eco-conscious capital markets

In addition to a wide range of conventional and alternative assets, you can also use a self-directed retirement account to buy private capital in companies that are environmentally conscious. Whether it’s a small business making eco-friendly beauty products or a startup manufacturing compostable bags, you can invest in green goods or services of your choice.

6. Investment in green technology

If you’re looking for more ways to make a difference while setting up your retirement portfolio, consider investing in clean commodities that will help save energy or resources. These could include sustainable tree plantations, recycled construction material, solar power technology and more. You could also use IRA funds to buy a green business or set one up on your own.

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DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation for writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.

Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He has over three decades of experience working with investments and retirement planning, and over the last 10 years has turned his focus to self-directed accounts and alternative investments. Rick regularly posts helpful tips and articles on his blog at SD Retirement as well as Business.com, SAP, MoneyForLunch, Biggerpocket, SocialMediaToday, and NuWireInvestor. If you need help and guidance with traditional or alternative investments, get in touch with Rick.

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