This is a post about one place where I put my money – Abundance Investment – it’s a good combination of renewable energy projects which means investing in a more ethical manner, good returns on your investment and a hedge away from the ups and downs of the equity markets. As Abundance put it “That’s people who want to invest for a rainy day, and would like to build a better world at the same time.”
I like the idea of investing money in the stock market (better returns for 1) but I’ve been a long time user of P2P investments. I have been a fan of P2P investments for a long time (before everyone hated the banks and the credit crunch) and I have been investing for over a decade with P2P with good and bad and some ugly. In theory, the performance should be like a turbocharged/junk bonds and you do get good rates of interest but without the chance of capital growth that you get from stocks. Interest rates on savings are poor as are bonds – so P2P is an alternative for investors.
With P2P The overall performance has been good (about 12% IRR over 12 years) – but I do feel sometimes that it’s a cross between a well paid hobby and an time consuming investment strategy – for Abundance I would add that it’s a sideline in keyboard eco-warrioring.
One place I find useful and would recommend is Abundance Investment (this is no advice and there is no referral for joining – just that I like them!). You’ve maybe seen their marketing and advertising around London – I think that I have, but maybe you don’t know much about the company.?
Abundance Investment: Investments that build a better world
Abundance offers investments that create something good for the environment and society, and a good financial return too. They let you invest directly in a range of businesses and projects that put your money to work building a future you can be proud to have shaped. They’ve invested £79.5 million pounds since 2012 in 34 projects and paid out £12.1, million
I have been invested for over 4 years now and I’ve had an average of £10,500 invested over that time and made a return of about £7000. That’s about a 12% IRR on my investment which I would consider to be quite good.
It’s not the only investments I have in renewable energy – I have some money in Greencoat Wind (UKW) and in some EIS eligible investments which I wrote about. I think it’s a good way to make money and to put your money where you mouth is – if you really care about global warming and the problems we are facing, do something about it!
Reasons to Investment with Abundance
There is a lot of competition on the P2P market place that’s for sure and I’m not actually that interested in finding out about the latest ones that are springing up all the time and promising very good returns. For Abundance the principle is quite clear, you invest your money in a range of renewable energy pro
jects which have a predicted rate of return (some as dividends, some as interest). At the moment there is a large investment available that aims to provide a 12% annualised return from the deployment of Tidal Power generation in Orkney.
Occasionally new projects are open for investment but I find that you can easily investment money through the Marketplace, where people can buy/sell parts of their investment. It’s a bit clunky at times but it gets the job done and it’s possible to buy or sell investments in amounts from £5 up to £5,000. They do sell at a premium/discount to reflect the value of the underlying investments – but when I’m selling, I normally just price to sell.
The website is good and works well on a smartphone – which is good for when your little Lady daughter is up all night screaming and you can’t sleep.
Abundance is also registered with the FSC – meaning they are regulated. You can also invest through and Innovative Finance ISA (IFISA) up to £20,000 per year or through your SIPP. The investments in question are also typically secured to an asset – it could be a wind turbine farm, solar panels on roofs – meaning you have a level of security in your investment. Furthermore, there have been no defaults to date with Abundance.
If you really like Abundance you can invest in the company itself! They are raising money on Seedrs at the moment. I had a look but although tempted (especially by the EIS status that you get and the 30% tax rebate), I don’t want to put more of my money into unlisted investments as I might need the money sooner rather than later.
There are some downsides too.
Some returns are no fixed, which means that if wind is good in the winter you get a high payment, but lower in the summer means you get less. Returns are also typically on a 6 monthly/project completion basis which means you gets a lumpy return. Furthermore, since you are investing in individual projects – which have returns ranging from 4.5% to 12%, you take extra risk in lack of diversification (some of which can be mitigated by buying/selling on the marketplace). It’s also not fully liquid and you can’t always find a buying for what you are trying to sell – so it’s not totally suitable for widows and orphans.
Finally, an important rule: Remember that return of capital is more important than return on capital! So don’t think that a 12% return is a risk free investment.
So I would say that you should consider Abundance as a place for your FIRE hoard. It’s an ethical way of investing that shouldn’t hurt your bank balance or the planet.