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In uncertain economic times, investors look for something — anything — to shore up their portfolios. But in 2022, there aren't many obvious options.
Cryptocurrencies have crashed, bonds and equities are down, and globalization has rendered the idea of expanding from domestic to international markets moot. As Tyler Hurlburt, a licensed financial advisor and wealth manager, explained, "It seems there's no safe haven, no place to hide."
So do we just throw in the towel? Of course not.
In today's podcast, Tyler explores some fantastic ways to brighten your IRA during these challenging times. He even offers a little goodie for you in the form of real cash you can invest today. Seriously. Real money.
Tyler is director of investor relations at Energea, a retail investment platform created to connect retail investors to portfolios of renewable energy projects in select global markets. Energea wants to democratize investing through direct equity ownership in renewable energy investments and empower full participation by small investors like you and me and everybody else that doesn't have a million dollars lying around.
The company may sound familiar to regular listeners because co-founder and managing partner Mike Silvestrini was a guest on SunCast Episode 400 and, before that, on Episode 85. And, in the name of full disclosure, I'm a member of the company's board as well as an investor.
Energea thinks the time is right to invest in renewables because global warming is intensifying, renewable energy costs are falling, and traditional investment classes are suffering from over-participation and value instability. Moreover, it's a great way to de-risk — reduce the risks — of equity-heavy portfolios.
Tyler is one of the smartest guys I know regarding wealth management, specifically around alternative strategies. His 22-year career in finance includes jobs at TIAA, Wells Fargo, Prudential Financial, Wachovia Securities Financial Network and Ameriprise Financial Services.
To understand how it became possible for individuals to invest in energy, you have to go back to the Jumpstart Our Business Startups Act or JOBS Act of 2012. The JOBS Act made it easier for startups to raise money and gave startups and small businesses more access to capital.
It triggered an investor uprising — a rush of investments from the little guys.
"It was monumental," Tyler said. "It began the trend of democratization in the retail investment space because it loosened regulations and reporting disclosures for companies with less than a billion dollars in revenue. It also introduced crowdfunding options for companies to raise capital more easily and quickly, which is important to us in energy."
Smaller companies can now issue investments through the Jobs Act without directly registering those investments with the US Securities and Exchange Commission (SEC), which is a costly, cumbersome process.
Tyler said the legislation opened the door to equity crowdfunding directed at the general public and gave non-accredited investors more opportunities to invest in startups.
Accredited investors are high-net-worth individuals who meet specific SEC requirements. A "non-accredited investor" is an umbrella term for everyone else — people with a net worth of less than $1 million and an income of less than $200,000 per year or $300,000 if married.
"Accredited investors are assumed to be more experienced and more sophisticated about the investment landscape than everyday retail or non-accredited investors," Tyler said. The SEC established the original rules to protect smaller, less savvy investors.
"But the investment landscape has shifted, and the government is rightfully giving more credit to non-accredited investors to make decisions on their own and take control of their retirement savings. It opened up a whole new world of alternative investment options for everyone," Tyler said.
He thinks having access to alternative investments is especially important relative to diversification during the current downturn.
"Alternative investments are nice because they're not correlated to the stock and bond market," he said, which means their cash flows are unaffected by changes in those markets.
Whether it's real estate or, in the case of energy, a solar investment, they are generally hedged against inflation. That's important to investors as inflation nears double digits.
Energea recently announced the August 1 launch of a self-directed IRA, allowing people to invest in alternative assets like energy through their qualified retirement plans. "They'll be able to do this right on the Energea website, and they'll never have to leave to go to another custodian. It'll all be self-contained and in-house here," Tyler said.
Why is a renewable energy project good to have inside an IRA? Because they're both long-term.
"A typical contract to purchase electricity is 20 years, sometimes 25 years. IRAs are the longest-term investment vehicle. So if you're matching up the investment objective with your retirement goal or retirement objective, they are a nice pairing," Tyler said.
Also, on the energy platform, you can either take monthly dividends as cash or reinvest those dividends. So if you're a little bit younger, you can reinvest those dividends and benefit from compound interest to grow assets over time. If you're closer to retirement, it can provide a steady income month in and month out.
Tune into the whole podcast to get the details on the IRA, which allows investment in community solar in Brazil and Africa as well as the US. "The US will have a different return risk profile than Africa or Brazil. But when you blend all those portfolios and projects, you come up with a 12.6% realized return," Tyler explains.
Remember that cash I promised? I invite our solar warriors to head to a particular part of the Energea website that promotes its partnership with SunCast. New users receive $50 of stock in our Community Solar in Brazil portfolio once they create an account and complete the onboarding process.
We're trying to take care of you and want to help you hedge your bets and diversify your portfolio. And who can argue against $50? That will take five minutes of your life. Go through the setup registration process, and we'll ensure you get that link to watch Tyler announce the self-directed IRA product. You'll also be added to the newsletter, so you know every time Energea updates its platform.
TIMESTAMPS:
(05:11) Important Job Act 2012 regulations
(07:22) Retail vs Accredited investors
(08:47) Importance of Job Act 2012 to Energea
(09:46) How to protect your portfolio old vs new way
(13:58) Why add alternative investment to your portfolio
(16:53) Different alternative investments
(18:37) Groundbreaking Energea IRA announcement
(20:24) What makes Energea IRA different
(21:41) Why have renewable energy project in a IRA
(23:35) The Energea team is the difference
(25:45) Investments available inside the IRA
(26:26) Previous yields across portfolios
(27:54) Special guide and get $50 free for the SunCast Tribe
(29:42) Wrap up
Thanks again to this week's sponsor, helping keep the podcast FREE to you!
SUNGROW focuses on integrated energy storage system solutions, including PCS, lithium-ion batteries and energy management system. Pleae visit https://www.mysuncast.com/sungrow
ABOUT THE HOST OF SUNCAST:
Nico Johnson is the creator and host of SunCast, consistently rated a top solar podcast in the clean energy sector. The content of the show is geared towards listeners looking for insights on where the markets are headed, how to position themselves or their companies, and what today's market leaders do to stay ahead of the pack.
Nico is an Investor, Executive Coach, and 15-year veteran of the solar industry, having led development in the US and Latin America for global companies like Trina Solar and Conergy.
You can connect with Nico Johnson on Twitter, LinkedIn or email.
If you’ve been second-guessing your work decisions or maybe trying to reconsider how you "fit" in the renewable energy industry -> grab 20 minutes on Nico's calendar and discuss whether having him as Your personal coach might be the right next step.