The Green Economy: October Investment Update

Is the economic recovery here or is a double-dip recession around the corner for the U.S. economy? That may be the burning question that is answered in the final quarter of 2010. As of today, here is what we know:

  • Gold is absurdly high
  • Broad stock market indexes have registered gains for 2010
  • Interest rates in the United States and Europe remain at or near record lows
  • The labor market and housing market remain subdued in the U.S., registering only marginal gains since last quarter
  • Consumer spending and consumer confidence remain low
  • Inflation is non-existent in the U.S. and sparse in other G-7 nations

All of which paints a picture of an economy that is not on solid enough footing to forecast an imminent economic recovery. As for those stock market gains:

2010 YTD Gains

Dow Jones Industrial Average +6.03%

NASDAQ +2.03%

Russell 2000 +9.36%

S&P 500 +4.21%

Actually not too bad, right? Before you answer consider the 3-year returns of the same indexes:

9/30/2007 – 9/30/2010

Dow Jones Industrial Average -5.24%

NASDAQ -4.21%

Russell 2000 -4.22%

S&P 500 -7.07%

Not quite as solid. In fact, despite strong assurances from stock brokers, equities remain volatile as global markets still unwind from the ongoing credit debacle. The bond market on the other hand have offered some great returns on investment. Many government bond funds have posted YTD returns of over 10%, with a few even posting over 20%. This is largely due to the continued influx into U.S. Treasury securities. This may not be the best time to invest more money in bond funds, as what goes up must come down. Eventually, interest rates will increase and erode the value of bonds (both government and corporate). Many market watchers are suggesting taking profits out of bond holdings before interest rates do turn higher.

So stocks remain shaky and bonds are overbought, where can an investor park money?

As contrary as it may sound with interest rates hovering in the 1% to 2% range, cash may not be a bad place. And if you are going to hold cash investments, Green Bank Report is going to suggest using environmentally-responsible green banks like those listed on this site with the following products:

Green Bank CDs

Green Bank Money Markets

Green Bank Savings Accounts

Green Bank Reward Checking Accounts

By finding the highest rates available from green banks, an investor can earn close to 3% on liquid funds while the stock and bond market volatility works itself out. It may not be the answer for everybody, but if investing in a socially-conscious manner appeals to you…consider a green bank portfolio.

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