How to monitor your renewable energy portfolio

Written by Rebecca Jones on 12th Apr 2019

This is the seventh and final article of our series, “How To Invest In Renewable Energy,” produced in collaboration with Mint Selection, a renewable energy finance and project development recruitment consultancy.

 

So, you’ve done your research, weighed up your renewable investment options, picked your platform and investment account and – finally – invested. Now what? In this, the final instalment of our comprehensive guide to investing in renewable energy, we cover that final investment question: how do I monitor my portfolio?

 

How often should I check on my investments?

This is tough for the novice investor, who – thrilled to finally be in the markets – can’t help but check her portfolio on a daily, if not hourly basis. This, however, is a BIG mistake. Your investment is likely to fluctuate according to all sorts of different factors: from dividend dates, to Bank of England announcements to movements in the pound. And so incessantly looking at your portfolio is likely only to drive you mad.

Ultimately, the optimum frequency to check your portfolio is annually, or at the most every six months. If you use a wealth or financial adviser this might be during a regular review, or you if you are self-employed then you might take a peak around tax return time. Whatever your saving style, be sure to set aside a regular day or two days of the year to take a look – but no more.

 

What if my investment has lost money?

Referring back to point one, your investment is almost certainly – at some point – going to lose money. When this happens, the key questions to ask are: how much, over what time period and why? If, on your judicious annual review, you see the investment has lost 10 per cent over the year but its peers and markets in general have tanked 15 per cent, then celebrate!

On the other hand, if its peers have gained 10 per cent as it has fallen 15 per cent, this could be cause for concern and you should do some research. Has it suffered a recent setback (maybe a delay in a new project?), or perhaps a senior manager has resigned? If your analysis reveals some fundamental problems you might consider selling. However, selling at a loss should only be done if it seems there is no hope of recovery. Remember the investing mantra: ‘buy low, sell high’.

 

Keep an eye on charges and alternatives

One thing to absolutely keep a beady eye on, though, are fees and charges as these have a strong influence on long-term returns. If the manager or provider of your investment hikes prices, you should make it your immediate business to find out why and assess whether or not it is justified. If it isn’t, then selling up and switching should be considered. Again, though, balance this against short term prospects of you are currently at a loss due to temporary factors.

Likewise, keeping an eye on new options coming to market is also sensible. If something comes along that looks much more suitable for you – either in terms of business practice, investment time horizon or returns, you should always explore it. Thanks to the internet, buying and selling investments is fairly easy these days and so you shouldn’t feel stuck. If you are selling for the right reason (i.e. NOT because you have lost a little money in the short-term) don’t hesitate.

 

Making the most of tax allowances

If you have chosen the start or the end of the tax year to assess your portfolio (or perhaps even if you haven’t!) you should make using your tax-free saving allowances a priority. The best place to start is the ISA range, which allows UK savers to invest up to £20,000 across a broad range of accounts including the Stocks and Shares ISA, the Lifetime ISA and the Innovative Finance ISA (to find out more, tune in to our Smug Money Podcast #6: Tackle the ISA jungle – and win!).

Any gains made inside an ISA are tax-free, otherwise savers pay tax at their income tax rate: 20 per cent, 40 per cent or 45 per cent (after a variable tax-free allowance). Over time, this can make a huge difference to returns. ISA allowances can be shared between spouses, meaning married couples can save up to £40,000 per year tax-free. If you have used up all of your allowance, you can look to other tax efficient vehicles like venture capital trusts or Enterprise Investment Schemes, which are suitable for sophisticated investors. (Check out our ‘Top 10 End of Tax Year Tips‘)

 

When is the best time to sell?

Ultimately this will be when you have planned to sell – i.e. five years-plus down the line and perhaps to fund a particular purchase or life event: a house, wedding, child’s education or retirement. Ideally the investment is doing well, you’ve made your projected return and you can cash out in good conscience. The same rules applies to selling now as when you may have noticed a tumble in previous years, though, and if it isn’t doing too well, you may want to consider hanging on if you can.

Of course you may also want to stay invested as you’ve grown rather fond of your renewable energy holding, meaning you’ll need to look elsewhere to pay for little Billy’s university fees. Every investor and investment is unique, particularly in the renewable energy space where innovation is driving a revolution in how our global society operates. For cool headed, dedicated investors it is an area should prove rewarding – both financially, and existentially.

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